==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
JONES INTERCABLE, INC.
(Name of Issuer)
CLASS A COMMON STOCK
$.01 PAR VALUE
(Title of Class of Securities)
480206-200
(CUSIP Number)
BELL CANADA INTERNATIONAL INC.
(Name of Persons Filing Statement)
Martine Turcotte
General Counsel
Bell Canada International Inc.
1000, rue de la Gauchetiere West, Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Tel. No.: (514) 392-2340
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
March 25, 1994
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this statement
because of Rule 13d-1(b)(3) or (4), check the following:[ ].
Check the following box if a fee is being paid with
this statement: [X].
Exhibit Index at Page 25
Page 1 of 93
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SCHEDULE 13D
______________________________ ________________________________
| | | |
|CUSIP No. 480206-200 | | Page 2 of 93 Pages |
|____________________________| |______________________________|
___________________________________________________________________________
| 1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | |
| | Bell Canada International Inc. |
|____|____________________________________________________________________|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* |
| | _ |
| | Not applicable (a) |_| |
| | _ |
| | (b) |_| |
| | |
|____|____________________________________________________________________|
| 3 | SEC USE ONLY |
| | |
|____|____________________________________________________________________|
| 4 | SOURCE OF FUNDS* |
| | AF |
|____|____________________________________________________________________|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _ |
| | PURSUANT TO ITEMS 2(d) or 2(e) |_| |
| | Not Applicable |
|____|____________________________________________________________________|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | Canada |
|____|____________________________________________________________________|
| | 7 | SOLE VOTING POWER |
| | | 2,500,000 |
| NUMBER OF |____|_______________________________________________|
| SHARES | 8 | SHARED VOTING POWER |
| BENEFICIALLY | | 0 |
| OWNED BY |____|_______________________________________________|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| REPORTING | | 2,500,000 |
| PERSON |____|_______________________________________________|
| WITH | 10 | SHARED DISPOSITIVE POWER |
| | | 0 |
|____________________|____|_______________________________________________|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | 2,500,000 |
|____|____________________________________________________________________|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES _ |
| | CERTAIN SHARES* Not applicable |_| |
|____|____________________________________________________________________|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | 16.9% |
|____|____________________________________________________________________|
| 14 | TYPE OF REPORTING PERSON* |
| | CO |
|____|____________________________________________________________________|
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SEC 1746 (9-88)
ITEM 1. SECURITY AND COMPANY.
--------------------
The class of equity securities to which this
statement relates is the Class A Common Stock, $.01 par
value per share (the "Class A Common Stock"), of Jones
Intercable, Inc., a Colorado corporation (the "Company").
The principal executive offices of the Company are located
at 9697 East Mineral Avenue, Englewood, Colorado 80112.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
The name of the person filing this statement is
Bell Canada International Inc., a corporation incorporated
under the Canada Business Corporations Act ("BCI"). The
address of the principal business and the principal office
of BCI is 1000, rue de la Gauchetiere West, Bureau 1100,
Montreal, Quebec, Canada H3B 4Y8. BCI is a corporation
holding and pursuing various international
telecommunications investments and provides
telecommunications consulting services.
BCI owns all of the outstanding common stock of
Bell Canada International BVI III Limited, a British Virgin
Islands international business corporation ("Bell BVI").
Bell BVI was incorporated by BCI on March 22, 1994 for the
purpose of holding BCI's investment in the Company. The
address of the principal business and principal office of
Bell BVI is Arawak Chambers, Main Street, Road Town,
Tortola, British Virgin Islands.
BCI is a wholly-owned subsidiary of BCE Telecom
International Inc., a corporation incorporated under the
Canada Business Corporations Act ("BCETI"), which is a
holding company. The address of the principal business and
the principal office of BCETI is 1000, rue de la Gauchetiere
West, Bureau 1100, Montreal, Quebec, Canada H3B 4Y8.
Pursuant to a reorganization effective as of January 31,
1994 (the "Reorganization"), BCI acquired certain interests
of BCETI, including all of BCETI's rights and obligations
under the letter of intent with the Company described below
in Item 6.
BCETI is a wholly owned subsidiary of BCE Inc., a
corporation incorporated under the Canada Business
Corporations Act ("BCE"). The address of the principal
business and the principal office of BCE is 1000 rue de la
Gauchetiere West, Bureau 3700, Montreal, Quebec, Canada H3B
4Y7. BCE is Canada's largest telecommunications company.
Page 3 of 93
The name, business address, present principal
occupation or employment, and citizenship of each director
and executive officer of each of BCI, Bell BVI, BCETI and
BCE is set forth on Schedule A, B, C and D, respectively.
For purposes of this Schedule 13D, "Bell Canada
Entities" means BCI, Bell BVI, BCETI and BCE.
During the last five years, none of the Bell
Canada Entities, nor any other person controlling any of the
Bell Canada Entities, nor, to the best of BCI's knowledge,
any of the persons listed on Schedule A, B, C or D attached
hereto, has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect
to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
As described below, the aggregate purchase price
for the 2,500,000 shares of Class A Common Stock (the
"Shares") purchased from the Company was $55,000,000. Such
price was contributed to the capital of Bell BVI by BCI,
which funded such amount by way of an interest bearing
demand loan from its ultimate parent company, BCE. The loan
bears interest at 30-day LIBOR plus 50 basis points.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
BCI has acquired the Shares for the purpose of
investment and as part of a proposed strategic relationship
with the Company and certain of its affiliates. As
described below, BCI currently is negotiating definitive
agreements with the Company, Glenn R. Jones, Chairman of the
Board and Chief Executive Officer of the Company ("Mr.
Jones"), and Jones International, Ltd. ("International"), a
wholly owned subsidiary of Mr. Jones, pursuant to which BCI
would purchase (i) from the Company an additional 7,500,000
shares of Class A Common Stock at a price of $27.50 per
share and (ii) from Mr. Jones and International an option on
approximately 2,700,000 shares of Common Stock, $.01 par
value per share (the "Common Stock"), of the Company, which
shares represent a majority of the outstanding Common Stock
and give the holder the power to elect 75% of the Board of
Directors of the Company. Among other things, the parties
Page 4 of 93
currently contemplate that BCI will have (i) the right to
nominate three members of the Board of Directors of the
Company, (ii) notice and consent rights over certain actions
by the Company and (iii) pre-emptive rights to maintain its
equity interest in the Company. See Item 6 -- Contracts,
Arrangements, Understandings or Relationships with Respect
to Securities of the Company. There can be no assurance
that any such transactions will be consummated or as to the
timing or exact terms thereof.
On December 23, 1993, BCE filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, to enable BCI to
acquire 50% or more of the capital stock of the Company.
The waiting period with respect to such filing expired on
January 26, 1994.
BCI intends to review periodically the Company's
business affairs, financial position and prospects. Based
on such evaluation and review, as well as the status of its
negotiations with the Company, Mr. Jones and International,
and general economic and industry conditions existing at the
time, BCI may consider from time to time various alternative
courses of action. Such actions may include the acquisition
of additional shares of Class A Common Stock or Common Stock
through open market purchases, privately negotiated
transactions, tender offer, exchange offer or otherwise.
Alternatively, such actions may involve the sale of all or a
portion of the Shares in the open market, in privately
negotiated transactions, through a registered public
offering or otherwise.
There can be no assurance that BCI will purchase
any additional shares of Class A Common Stock or Common
Stock, obtain control of the Company or take any of the
other actions enumerated above. Except as set forth above,
none of the Bell Canada Entities, any person controlling the
Bell Canada Entities, or to the best of BCI's knowledge, any
of the persons named in Schedules A, B, C or D, has any plan
or proposals which relate to or would result in any of the
transactions described in subparagraphs (a) through (j) of
Item 4 of Schedule 13D.
Page 5 of 93
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY.
-------------------------------------
The Company's authorized capital stock consists of
5,550,000 shares of Common Stock and 30,000,000 shares of
Class A Common Stock. Based on information furnished to BCI
by the Company, BCI believes that immediately following the
purchase of the Shares, there were outstanding 4,913,021
shares of Common Stock and 14,775,088 shares of Class A
Common Stock. The Class A Common Stock has voting rights
that are generally 1/10th of those held by the Common Stock.
In the election of directors, the holders of Class A Common
Stock, voting as a separate class, are entitled to elect
that number of directors that constitute 25% of the total
membership of the board of directors. Holders of the Common
Stock, also voting as a separate class, are entitled to
elect the remaining directors. For purposes of this
Schedule 13D, "Capital Stock" means the Common Stock and the
Class A Common Stock.
(a) For the purpose of Rule 13d-3 promulgated
under the Exchange Act, BCI, through Bell BVI, beneficially
owns 2,500,000 shares of Class A Common Stock, representing
approximately 16.9% of the outstanding Class A Common Stock
and 12.7% of the outstanding Capital Stock.
By virtue of BCI being an indirect wholly-owned
subsidiary of BCE, BCE may be deemed to beneficially own the
2,500,000 Shares which are beneficially owned by BCI.
Except as set forth in this Item 5(a), none of the
Bell Canada Entities, nor any other person controlling the
Bell Canada Entities, nor, to the best of BCI's knowledge,
any persons named in Schedule A, B, C or D hereto owns
beneficially any Class A Common Stock or Common Stock.
(b) BCI, through Bell BVI, has the sole power to
vote or to direct the voting of, and the sole power to
dispose or to direct the disposition of, the Shares.
By virtue of BCI being a wholly-owned subsidiary
of BCE, BCE may be deemed to share the voting and
disposition power with respect to the Shares.
(c) No transactions in Class A Common Stock have
been effected during the last 60 days by any Bell Canada
Entity, any other person controlling any Bell Canada Entity,
or to the best of BCI's knowledge, any of the persons named
in Schedule A, B, C or D.
(d) Inapplicable.
Page 6 of 93
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
------------------------------------------
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
-----------------------------------------------
COMPANY.
--------
A. The Letter of Intent
--------------------
On December 2, 1993, BCETI entered into a letter
of intent (the "Letter of Intent") with the Company, Mr.
Jones and International, pursuant to which it would (i)
invest $275,000,000 in the Company to acquire 10,000,000
shares of Class A Common Stock at a price of $27.50 per
share, representing an approximately 30% equity interest in
the Company and (ii) purchase from Mr. Jones and
International an option (the "Control Option") to acquire a
majority of the outstanding shares of Common Stock, which
shares give the holder the power to elect 75% of the Board
of Directors of the Company. BCI acquired all rights and
obligations of BCETI under the Letter of Intent pursuant to
the Reorganization described in Item 2.
The Letter of Intent provides, among other things,
that BCI (i) will be entitled to nominate three members of
the Board of Directors of the Company, (ii) will have the
right to prior notice and consent over certain actions by
the Company, including the authorization and issuance of
additional equity securities, amendments to the Articles of
Incorporation or bylaws of the Company, the acquisition or
sale of assets of the Company over a certain threshold, the
incurrence of certain long-term debt and certain corporate
reorganizations, (iii) will purchase an additional
$125,000,000 of equity securities of the Company, for a
total investment in the Company of $400,000,000 and (iv)
will have preemptive rights to maintain its then equity
interest in the Company. The Letter of Intent also
contemplates that BCI and Mr. Jones will refer to the
Company certain cable television and wireline business
opportunities, and that the Company and BCI will collaborate
in a number of technological, operational and other areas.
BCI would purchase the Control Option from Mr.
Jones and International for a price of $20.00 per share, or
approximately $55,000,000 in the aggregate. The Control
Option would be exercisable at BCI's option between the
seventh and eighth anniversary of the closing, or earlier
upon the occurrence of any of the following triggering
events: (i) the death or incapacitation of Mr. Jones, (ii)
the resignation of Mr. Jones as Chief Executive Officer of
the Company or (iii) at any time after the fifth anniversary
Page 7 of 93
of the closing if Mr. Jones and International so request.
If BCI does not exercise the Control Option within an agreed
upon time following a triggering event (except in the case
of a resignation), or prior to the eighth anniversary of the
closing, the Control Option will expire.
If BCI elects to exercise the Control Option, each
share of Common Stock covered by the Control Option will be
purchased at a price per share determined in part by an
agreed upon formula and in part by the then current market
price for Class A Common Stock. Approximately two-thirds of
the exercise price for each such share of Common Stock will
be determined by a formula which depends on when the Option
is exercised:
Anniversary of the Base Price
closing
0 $30.00
1 $40.32
2 $45.16
3 $50.58
4 $56.65
5 $63.44
6 $71.06
7 $79.58
8 $89.13
The remaining one-third of the exercise price per share
would be 120% of the then market price for the Class A
Common Stock. The amount paid by BCI to purchase the
Control Option will not offset the exercise price if and
when the Control Option is exercised.
BCI will also have the first right to acquire any
shares of Class A Common Stock which Mr. Jones or
International desire to sell from time to time in excess of
certain amounts. Such shares, if acquired by BCI, would be
purchased at the then market price for the Class A Common
Stock.
The Letter of Intent also contemplates that BCI
will invest in two subsidiaries of International, Jones
Lightwave, Ltd. ("Lightwave") and Jones Education Networks,
Ltd. ("Education"). It is contemplated that BCI will invest
approximately $18,000,000 in Education, which would result
in BCI owning approximately 15% of the outstanding equity in
Education, and $5,000,000 in Lightwave, which would result
in BCI owning approximately 50% of the outstanding equity in
Lightwave. BCI would also lend Lightwave $5,000,000.
Page 8 of 93
The Letter of Intent is subject to the negotiation
and execution of mutually acceptable definitive agreements
and certain other conditions, including the acquisition by
the Company of substantially all the assets of Jones
Spacelink, Ltd., the Company's parent company. The parties
to the Letter of Intent have agreed to use their reasonable
best efforts to prepare definitive agreements; however, the
Letter of Intent is only a statement of intent and the
parties thereto are not contractually obligated to
consummate the proposed transactions. A copy of the Letter
of Intent is attached hereto as Exhibit 1.
B. Recent Developments
-------------------
On March 28, 1994, BCI and the Company announced
that the transactions contemplated by the Letter of Intent
were proceeding forward, and that the date for the
negotiation of the definitive agreements contemplated by the
Letter of Intent had been extended to April 8, 1994.
However, in light of the actions of the Federal
Communications Commission in February announcing additional
rate rollbacks for cable television system operators, the
Company and BCI also announced that certain financial terms
and the timing of BCI's investment in the Company had been
modified. A copy of the press release issued on March 28,
1994 by BCI is attached hereto as Exhibit 5.
Pursuant to the Investment Agreement described
below, on March 25, 1994, BCI, through its wholly owned
subsidiary Bell BVI, purchased the Shares for $22.00 per
share, or an aggregate purchase price of $55,000,000. The
Shares acquired by Bell BVI were sold by the Company
pursuant to an effective Registration Statement under the
Securities Act of 1933 (the "1933 Act") covering 6,000,000
shares of Class A Common Stock.
Subject to terms and conditions to be agreed upon
in the definitive agreements contemplated by the Letter of
Intent, the parties currently expect that at the closing of
the transactions contemplated by the Letter of Intent, BCI
will purchase an additional 7,500,000 shares of Class A
Common Stock at the originally agreed upon price of $27.50
per share, resulting in additional proceeds to the Company
of $206,250,000. Including the Shares purchased pursuant to
the Investment Agreement described below, this will result
in aggregate proceeds to the Company of $261,250,000, or an
average aggregate investment price per share of $26.125,
which represents an approximately 5% reduction from the
original price of $27.50 per share. The original commitment
of BCI to invest up to $400,000,000 in the Company will
Page 9 of 93
remain unchanged, and the remaining $138,750,000 will be
invested as originally planned to maintain BCI's 30%
interest in connection with anticipated future public
offerings of equity securities by the Company.
A corresponding 5% reduction will be taken on the
per share option deposit price to be paid by BCI to Mr.
Jones and International, which will be reduced from $20 per
share to $19 per share. The proceeds to Mr. Jones and
International will be approximately $52,000,000 under the
restructured plan. In addition, the exercise price per
share under the Control Option during the first six months
will be based entirely on a market-based formula to be
agreed, and the fixed portion of the exercise price during
the second six-month period will be correspondingly reduced
by 5%.
C. Investment Agreement and Assignment Agreement
---------------------------------------------
Pursuant to the Investment Agreement dated
March 25, 1994 (the "Investment Agreement") between the
Company and BCI, BCI agreed to purchase from the Company,
and the Company agreed to sell to BCI, 2,500,000 shares of
Class A Common Stock (the "Shares"), for a purchase price of
$22.00 per share. The terms of the Investment Agreement do
not restrict in any way BCI's ability to take any actions as
a shareholder or otherwise, including voting the Shares or
acquiring additional shares of Class A Common Stock or other
securities of the Company. The Investment Agreement also
gives BCI the right to designate one observer to attend
meetings of the Company's Board of Directors. A copy of the
Investment Agreement is attached hereto as Exhibit 2.
Pursuant to the Assignment Agreement dated March
25, 1994 (the "Assignment Agreement") between BCI and Bell
BVI, BCI assigned its rights, but not its obligations, under
the Investment Agreement to Bell BVI. In accordance with
the terms of the Assignment Agreement, on March 25, 1994
Bell BVI purchased the Shares from the Company. A copy of
the Assignment Agreement is attached hereto as Exhibit 3.
D. Registration Rights Agreement
-----------------------------
Pursuant to the terms of the Registration Rights
Agreement dated March 25, 1994 (the "Registration Rights
Agreement") between the Company and BCI, BCI has the right
to demand on three separate occasions that the Company
register the Shares for sale to the public under the 1933
Act in the event that the transactions contemplated by the
Letter of Intent are not consummated. In addition, BCI has
Page 10 of 93
the right to participate in registrations by the Company of
its equity securities. The Company has agreed to pay the
expenses associated with any such registrations. A copy of
the Registration Rights Agreement is attached hereto as
Exhibit 4.
The foregoing summaries of the Letter of Intent,
Investment Agreement, Registration Rights Agreement and
Assignment Agreement are not intended to be complete and are
qualified in their entirety by reference to the relevant
agreements, copies of which are attached hereto as Exhibits
1, 2, 3 and 4.
E. Other Developments
----------------------
On March 30, 1994, BCI, the Company, Jones Global
Group, Inc. and Cable and Wireless plc ("Cable & Wireless")
announced the signing of a letter of intent to consolidate
their cable television and associated telephony operations
in the United Kingdom. The transaction would combine the
cable interests of these companies into BCETI Cable Limited,
which is currently owned 80% by BCI and 20% by Cable &
Wireless.
To the best knowledge of BCI, except as referred
to or described herein, there are no contracts,
arrangements, understandings or relationships (legal or
otherwise) between the persons enumerated in Item 2, and any
other person, with respect to any securities of the Company,
including, but not limited to, transfer or voting of any of
the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of
proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit 1: Letter of Intent dated as of December 2,
1993 among BCE Telecom International
Inc., the Company, International and Mr.
Jones, and extension agreement dated
March 17, 1994
Exhibit 2: Investment Agreement dated as of
March 25, 1994 between the Company and
BCI
Exhibit 3: Assignment Agreement dated as of
March 25, 1994 between BCI and Bell BVI
Page 11 of 93
Exhibit 4: Registration Rights Agreement dated as
of March 25, 1994 between the Company
and BCI
Exhibit 5: BCI Press Release dated March 28, 1994
Page 12 of 93
SIGNATURES
----------
After reasonable inquiry and to the best knowledge
and belief of the undersigned, the undersigned certifies
that the information set forth in this statement is true,
complete and correct.
Date: April 1, 1994
BELL CANADA INTERNATIONAL INC.
By: /s/ Martine Turcotte
---------------------------
Name: Martine Turcotte
Title: General Counsel and
Corporate Secretary
Page 13 of 93
Schedule A
----------
DIRECTORS AND EXECUTIVE OFFICERS
OF BELL CANADA INTERNATIONAL INC.
The name, business address, title, present principal
occupation or employment and citizenship of each of the directors
and executive officers of Bell Canada International Inc. ("BCI")
are set forth below. If no business address is given the
director's or officer's business address is 1000, rue de la
Gauchetiere West, Bureau 1100, Montreal, Quebec, Canada H3B 4Y8.
Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to BCI.
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCI of Employer(1) Citizenship
------------ ----------------------- -----------
Derek H. Burney Chairman of the Board Canadian
Director and and CEO
Officer
Jacques B. Berube Executive Vice-President Canadian
Director Bell Canada
1050 Beaver Hall Hill
19th Floor
Montreal, Quebec H2Z 1S4
Thomas J. Bourke President and CEO Canadian
Director Tele-Direct (Publications)
Inc.
1600 Rene-Levesque Blvd. West
Suite 1850
Montreal, Quebec H3H 1P9
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 14 of 93
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCI of Employer(1) Citizenship
------------ ----------------------- -----------
J. Derek M. Davies Senior Vice-President Canadian
Director BCE Inc.
1000 de la Gauchetiere
Street West
Suite 3700
Montreal, Quebec H3B 4Y7
Josef F. Fridman Senior Vice-President, Law Canadian
Director BCE Inc.
1000 de la Gauchetiere
Street West
Suite 3700
Montreal, Quebec H3B 4Y7
W. Brian Hewat President and CEO Canadian
Director Bell Northern Research
3500 Carling Avenue
Department AAOO - Lab 5
P.O. Box 3511, Station C
Ottawa, Ontario K1Y 4H7
Robert Kearney Chairman Canadian
Director BCE Telecom Canadian Group
BCE Inc.
1000 de la Gauchetiere
Street West
Suite 3700
Montreal, Quebec H3B 4Y7
Gerald T. McGoey Executive Vice-President Canadian
Director and Chief Financial
Officer
BCE Inc.
1000 de la Gauchetiere
Street West
Suite 3700
Montreal, Quebec H3B 4Y7
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 15 of 93
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCI of Employer(1) Citizenship
------------ ----------------------- -----------
John T. McLennan President and CEO Canadian
Director Bell Canada
1050 Beaver Hall Hill
19th Floor
Montreal, Quebec H2Z 1S4
C. Wesley M. Scott President and CEO Canadian
Director Stentor Resource Centre
Inc.
160 Elgin Street
Suite 1800
Ottawa, Ontario K1G 3J4
Lynton R. Wilson Chairman, President Canadian
Director and CEO
BCE Inc.
1000 de la Gauchetiere
Street West
Suite 3700
Montreal, Quebec H3B 4Y7
Robert Drolet Assistant Corporate Canadian
Officer Secretary
Michael Lisogurski Group Vice-President Canadian
Officer Business Development
C.S. Loudiadis Group Vice-President Canadian
Officer Telecom Services
Christian M. Paupe Vice-President Canadian
Officer Corporate Finance and Swiss
Serge Rouleau Vice-President Canadian
Officer Business Development
(CALA)
Richard Roy Corporate Comptroller Canadian
Officer
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 16 of 93
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCI of Employer(1) Citizenship
------------ ----------------------- -----------
Daniel E. Somers Senior Vice-President Canadian
Officer and CFO
Brian A. Tickle President and Chief Canadian
Officer Operating Officer
Martine Turcotte General Counsel and Canadian
Officer Corporate Secretary
Leonard J. van Vice-President, Canadian
der Heyden Human Resources
Officer and Corporate Services
Ronald Weiss Vice-President, Canadian
Officer Business Development
(Southeast Asia)
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 17 of 93
Schedule B
----------
DIRECTORS AND EXECUTIVE OFFICERS OF BELL
CANADA INTERNATIONAL BVI III LIMITED
The name, business address, title, present principal
occupation or employment and citizenship of each of the directors
and executive officers of Bell Canada International BVI III
Limited ("Bell BVI") are set forth below. If no business address
is given the director's or officer's business address is Arawak
Trust Company Limited, Main Street, Road Town, Tortola, British
Virgin Islands.
Present Principal
Name and Occupation Including
Relationship Name and Address
to Bell BVI of Employer(1) Citizenship
------------- ----------------------- -----------
David Raworth Attorney British
Director & Smith-Hughes Raworth
President & McKenzie
Arawak Chambers
P.O. Box 173
Road Town, Tortola
British Virgin Islands
Anthony G. Lynton Attorney Barbadian
Secretary Smith-Hughes Raworth
& McKenzie
Arawak Chambers
P.O. Box 173
Road Town, Tortola
British Virgin Islands
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 18 of 93
Schedule C
----------
DIRECTORS AND EXECUTIVE OFFICERS
OF BCE TELECOM INTERNATIONAL INC.
The name, business address, title, present principal
occupation or employment and citizenship of each of the directors
and executive officers of BCE Telecom International Inc.
("BCETI") are set forth below. If no business address is given
the director's or officer's business address is 1000, rue de la
Gauchetiere, Bureau 1100, Montreal, Quebec, Canada H3B 4Y8.
Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to BCETI.
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCETI of Employer(1) Citizenship
------------ ----------------------- -----------
Derek H. Burney Chairman of the Board Canadian
Director & Officer
Daniel E. Somers Chief Financial Officer Canadian
Director & Officer
Brian A. Tickle President Canadian
Director & Officer
Martine Turcotte Corporate Secretary Canadian
Officer
Robert Drolet Assistant Corporate Canadian
Officer Secretary
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 19 of 93
Schedule D
----------
DIRECTORS AND EXECUTIVE OFFICERS OF BCE INC.
The name, business address, title, present principal
occupation or employment and citizenship of each of the directors
and executive officers of BCE Inc. ("BCE") are set forth below.
If no business address is given the director's or officer's
business address is 1000 rue de la Gauchetiere West, Bureau 3700,
Montreal, Quebec, Canada H3B 4Y7. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to
BCE.
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCE of Employer(1) Citizenship
------------ ----------------------- -----------
Peter A. Allen Chairman of the Board, Canadian
Director President and Chief
Executive Officer
Lac Minerals, Ltd.
Royal Bank Plaza
North Tower
Suite 2105, P.O. Box 156
Toronto, Ontario M5J 2J4
Ralph M. Barford President Canadian
Director Valleydene Corporation
Limited
20 Eglinton Avenue West
Suite 1903
P.O. Box 2026
Toronto, Ontario M4R 1K8
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 20 of 93
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCE of Employer(1) Citizenship
------------ ----------------------- -----------
Warren Chippindale Retired Canadian
F.C.A. Cuttle Street
Director P.O. Box 9
Mont-Tremblant, Quebec
J0T 1Z0
J.V. Raymond Cyr Chairman of the Board Canadian
O.C. Bell Canada
Director c/o 1000 de la Gauchetiere
Street West
Suite 3700
Montreal, Quebec H3B 4Y8
C. William Daniel Retired Canadian
O.C. c/o Bank of Montreal
Director 4th Floor, 302 Bay Street
Toronto, Ontario M5X 1A1
A. Jean de Grandpre Founding Director and Canadian
C.C., Q.C. Chairman Emeritus
Director
Jeannine Guillevin Chairman of the Board Canadian
Wood and CEO
Director Guillevin International Inc.
400 Montpellier Road
St-Laurent, Quebec H4N 2G7
The Hon. Donald J. Legal Counsel Canadian
Johnston, P.C. Q.C. Heenan Blaikie
Director 1250 Rene-Levesque Blvd.
West
Suite 2500
Montreal, Quebec H3B 4Y1
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 21 of 93
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCE of Employer(1) Citizenship
------------ ----------------------- -----------
Gerald J. Maier Chairman of the Board Canadian
Director and CEO
TransCanada PipeLines
Limited
TransCanada Pipelines Tower
111, 5th Avenue S.W.
29th Floor
Calgary, Alberta T2P 3Y6
E. Neil McKelvey Legal Counsel Canadian
O.C., Q.C. Stewart McKelvey Stirling
Director Scales
P.O. Box 7289
Postal Station A
Saint John, New Brunswick
E2L 4S6
J. Edward Newall President and CEO Canadian
O.C. NOVA Corporation of Alberta
Director P.O. Box 2535, Station M
801 - 7th Avenue S.W.
Calgary, Alberta T2P 2N6
Alastair H. Ross President Canadian
Director Allaro Resources Ltd.
630, 6th Avenue S.W.
10th Floor
Calgary, Alberta T2P 0S8
C. Richard Sharpe Chairman of the Board Canadian
Director Sears Canada Inc.
222 Jarvis Street
9th Floor
Toronto, Ontario M5B 2B8
Louise B. Retired Canadian
Vaillancourt C.M. c/o Tour Banque Nationale
Director 600 de la Gauchetiere
Street West
10th Floor
Montreal, Quebec H3B 4L2
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 22 of 93
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCE of Employer(1) Citizenship
------------ ------------------------ -----------
Lynton R. Wilson Chairman, President Canadian
Director and Officer and CEO
William D. Anderson Vice President, Taxation Canadian
Officer
Frederick J. Andrew Vice-President and Canadian
Officer Treasurer
Thomas J. Bourke Group Vice-President, Canadian
Officer Directories of BCE;
President and CEO
Tele-Direct (Publications) Inc.
1600 Rene-Levesque Blvd. West
Suite 1850
Montreal, Quebec H3H 1P9
Derek H. Burney Executive Vice-President Canadian
Officer of BCE;
Chairman of the Board and CEO
Bell Canada International Inc.
1000 de la Gauchetiere
Street West
Suite 1100
Montreal, Quebec H3B 4Y8
J. Derek M. Davies Senior Vice-President Canadian
Officer Corporate Strategy
Josef J. Fridman Senior Vice-President, Canadian
Officer Law
Guy Houle Vice President and Canadian
Officer Corporate Secretary
BCE Inc.
c/o 1050 Beaver Hall Hill
Suite 1420
Montreal, Quebec H2Z 1S4
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 23 of 93
William R. Kerr Vice President and Canadian
Officer Comptroller
Present Principal
Name and Occupation Including
Relationship Name and Address
to BCE of Employer(1) Citizenship
------------ ------------------------ -----------
Charles A. Labarge Vice-President, Canadian
Officer Corporate Services
Gerald T. McGoey Executive Vice-President Canadian
Officer and Chief Financial Officer
--------------------
(1) Same address as director's or officer's business
address except where indicated.
Page 24 of 93
INDEX TO EXHIBITS
No. Exhibit Page
-- ------- ----
Exhibit 1: Letter of Intent dated as of December 2,
1993 among BCE Telecom International
Inc., the Company, International and Mr.
Jones, and extension agreement dated
March 17, 1994
Exhibit 2: Investment Agreement dated as of
March 25, 1994 between the Company and
BCI
Exhibit 3: Assignment Agreement dated as of
March 25, 1994 between BCI and Bell BVI
Exhibit 4: Registration Rights Agreement dated as
of March 25, 1994 between the Company
and BCI
Exhibit 5: BCI Press Release dated March 28, 1994
Page 25 of 93
EXHIBIT 1
CONFORMED COPY
BCE Telecom International
1000, rue de la Gauchetiere
Montreal, Quebec
Canada H3B 4Y8
December 2, 1993
Glenn R. Jones
Jones International, Ltd.
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80155-3309
Dear Sirs:
This will confirm our understanding with respect to the
transactions described in the attached term sheets (the "Term Sheets").
The Parties acknowledge that the transactions described in the Terms Sheets
have been approved by the respective Boards of Directors of BCE Telecom
International ("Purchaser"), Jones International, Ltd. ("International")
and Jones Intercable, Inc. (the "Company"), subject to the negotiation of
mutually acceptable definitive agreements and satisfactory completion of
due diligence by Purchaser. For purposes of this letter agreement,
"Parties" means Purchaser, International, the Company and Glenn R. Jones
("Jones").
1. Each of the Parties agrees to use its respective reasonable
best efforts to negotiate definitive agreements based on the Term Sheets.
Such definitive agreements shall cover all of the transactions contemplated
by all of the Term Sheets and no definitive agreement shall become
effective unless all of the definitive agreements contemplated by all of
the Term Sheets shall have been entered into and become effective. As soon
as practicable following the execution of this letter, the relevant
reporting entities will file a Notification and Report Form with the
Federal Trade Commission and the Department of
Page 26 of 93
Justice in accordance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
2. The Company and International acknowledge that Purchaser is
entitled to conduct its own due diligence review of the business conducted
by the Company and Jones Spacelink, Ltd. ("Parent") and agree to afford to
Purchaser and its representatives full and complete access to such material
as will enable them to investigate the accuracy of financial data and other
information provided by or on behalf of the Company or Parent. Any such
investigations by the Purchaser and its representatives will be conducted
so as not to unreasonably disrupt the business operations of the Company or
Parent. Purchaser acknowledges that the confidentiality agreements
executed prior to the date hereof will remain in full force and effect.
3. Subject to paragraph 4, during the Term (as defined in
paragraph 12 below) none of the Company, International, any Affiliated
Entity and the officers, directors, employees or other agents of the
Company, International and any Affiliated Entity, and the employees or
agents of Jones (collectively, the "Blackhawk Persons") will, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal (as defined below) or (ii) subject, in the case of the
Company, to the fiduciary duties of the Board of Directors of the Company
under applicable law as advised by counsel to the Company, with a view to
pursuing an Acquisition Proposal with any person (x) engage in negotiations
with, or (y) disclose any nonpublic information relating to the Company,
Parent or any entity controlled or more than 50% owned by the Company or
Parent (a "Subsidiary") to, or (z) afford access to the properties, books
or records of the Company, Parent or any Subsidiary to, any such person or
its directors, officers, employees or agents. The Company and
International will promptly notify Purchaser after receipt by a Blackhawk
Person or (A) any Acquisition Proposal or (B) actual notice that any person
is giving serious consideration to making an Acquisition Proposal or (C)
any request for nonpublic information relating to the Company, Parent or
any Subsidiary or for access to the properties, books or records of the
Company, Parent or any Subsidiary by any person that a Blackhawk Person
reasonably believes is considering making or has made, an Acquisition
Proposal and will keep Purchaser fully informed of the status and details
of any such Acquisition Proposal, notice or request. Nothing in this
paragraph 3 shall prevent a Blackhawk Person from discussing, negotiating
and otherwise pursuing transactions that will involve the acquisition by
the
Page 27 of 93
Company of businesses that are in the same line of business as the Company.
For purposes of this letter of intent, (A) "Acquisition Proposal" means a
bona fide offer or proposal for, or indication of interest in, a merger or
other business combination involving the Company, Parent or any Subsidiary
or the acquisition of any equity interest in, or a substantial portion of
the assets of, the Company, Parent or any Subsidiary, other than the
transactions contemplated by the Term Sheets and this letter of intent and
other than the Company/Parent Business Combination (as defined in paragraph
11 below), and (B) "Affiliated Entity" means any entity controlled or more
than 50% owned, directly or indirectly, by Jones or International, other
than the Company, Parent and the Subsidiaries. In no event will
International be liable under this paragraph 3 for amounts in excess of
$5,000,000 in the aggregate.
4. The Company acknowledges that its business plan does not
anticipate any need to raise equity financing during the Term. If during
the Term the Company believes that its sources of funds may be insufficient
to meet its projected cash requirements, the Company will discuss potential
sources of financing to fund such projected shortfall. If after such
discussions the Company reasonably believes that equity financing is its
preferred alternative, the Company may sell up to 1,500,000 shares of Class
A Common Stock, provided that prior to any such sale it first offers such
shares to Purchaser. Purchaser's initial investment in the Company will be
reduced by the number of any shares purchased pursuant to this paragraph 4.
5. During the Term, each of International and Jones agree (i)
not to directly or indirectly sell, pledge or otherwise dispose of Class B
Common Stock in Parent or Common Stock in the Company, (ii) not to directly
or indirectly enter into any proxy or voting arrangement with respect to
any equity securities of Parent or Company or vote shares in either entity
in any manner inconsistent with the transactions contemplated by the Term
Sheets, (iii) to use reasonable best efforts to cause Parent not to sell,
pledge or otherwise dispose of its shares of Common Stock in the Company,
or enter into any proxy or voting arrangement with respect to such shares
or vote such shares in any manner inconsistent with the transactions
contemplated by the Term Sheets (except in each case pursuant to the
Company/Parent Business Combination) and (iv) not to enter into any
agreement with respect to the foregoing.
6. During the Term, Jones, International and the Company will
use reasonable efforts to keep Purchaser
Page 28 of 93
informed as to the material developments affecting the business of the
Company and Parent.
7. None of the Parties shall issue (or allow their affiliates to
issue) any press release or make any public statement with respect to this
letter of intent or the transactions contemplated hereby without the
consent of the other parties hereto, except as may be required by
applicable law, listing agreement with any securities exchange or similar
agreement or requirement, in which case the parties hereto shall consult on
the content of any such disclosure prior to its public dissemination.
8. The Company agrees that in the event it enters into an
agreement relating to a Material Financing Transaction prior to 45 days
after the termination of the Term, the Company will pay to Purchaser an
amount in cash equal to $5,000,000. "Material Financing Transaction" means
any transaction pursuant to which (i) the Company issues (or is obligated
to issue pursuant to the terms of a convertible or similar security) more
than 1,000,000 shares of its common stock at a price greater than $27.50
per share (not including any shares issued pursuant to paragraph 4), (ii)
the Company sells substantially all of its assets to a third party, or
(iii) the Company consummates a merger, recapitalization, restructuring or
other business combination involving the Company pursuant to which any
class of common stock of the Company is valued at a price greater than
$27.50 per share.
9. Jones and International agree that in the event they or any
of their affiliates enter into an agreement relating to a Material Sale
Transaction prior to 45 days after the termination of the Term,
International (but not Jones) will pay, or cause to be paid, to Purchaser
an amount in cash equal to $5,000,000, provided that in no event
will Purchaser be entitled to receive more than one payment pursuant to
this paragraph and the immediately preceding paragraph. "Material Sale
Transaction" means any transaction pursuant to which International, Parent
or Jones, directly, or indirectly, sell, or agree to sell, or grant an
option or similar right with respect to, or enter into any voting
arrangement with an affiliated party covering, either (x) a majority of the
outstanding shares of Common Stock of the Company or (x) a majority of the
outstanding shares of Class B Common Stock of Parent.
10. During the Term, none of Purchaser or any entity controlled
or more than 50% owned, directly or indirectly, by Purchaser, and the
officers, directors,
Page 29 of 93
employees or other agents of Purchaser or any such entity will, directly or
indirectly, (i) take any action to solicit, initiate or encourage any Cable
Acquisition Proposal (as defined below) or (ii) with a view to pursuing a
Cable Acquisition Proposal with any person, engage in negotiations, or
exchange information, with any such person or its directors, officers,
employees or agents. Purchaser will promptly notify the Company after
receipt by it of (A) a Cable Acquisition Proposal or (B) actual notice from
a third party that it is seriously considering making or is interested in
receiving a Cable Acquisition Proposal. Purchaser will keep the Company
fully informed of the status and details of any such Cable Acquisition
Proposal or notice. For purposes of this paragraph 10, "Cable Acquisition
Proposal" means any bona fide offer or proposal for, or indication of
interest in, (x) a merger or other business combination involving Purchaser
(or any entity controlled or more than 50% owned by Purchaser) and any of
the companies listed on Schedule I hereto or any entity controlled or more
than 50% owned by any such companies or (y) the acquisition of any equity
interest in, or a substantial portion of the assets of, any such companies
or entities.
11. The Term Sheets and this letter of intent are only statements
of intent and do not constitute a contractual commitment of the parties
hereto or an agreement to enter into a contractual commitment. This letter
of intent and the Term Sheets do not address all matters upon which
agreement must be reached in order to enter into definitive agreements or
consummate the transactions contemplated by the Term Sheets. A binding
commitment with respect to such transactions will be set forth only in
definitive agreements mutually acceptable to the parties hereto, which
agreements will not be entered into until after the proposed asset purchase
transaction between Company and Parent (the "Parent/Company Business
Combination") has been approved by the Board of Directors of each company,
and the definitive agreement covering such transaction has been executed.
The Parties agree that the definitive agreements which are the subject of
this letter of intent will provide that no party shall be obligated to
consummate the transactions covered by such agreements if the
Parent/Company Business Combination shall not have been completed on the
terms set forth in the definitive agreement covering such transaction.
Notwithstanding the foregoing, the provisions of this letter of intent set
forth in paragraphs 2 through 15 hereof are intended to be binding on the
parties hereto.
Page 30 of 93
12. This letter of intent terminates on the earliest of (i)
February 18, 1994, (ii) the execution and delivery of definitive agreements
and (iii) the mutual agreement of the Parties to terminate this letter
agreement. For purposes of this letter agreement, "Term" means the period
from the date hereof to the termination of this letter agreement.
13. This letter of intent shall be governed by the laws of the
State of Colorado without regard to its conflict of law rules.
14. Except as otherwise specified herein and in the Term Sheets,
all costs and expenses incurred in connection with the transactions
contemplated hereby shall be paid by the Party incurring such costs or
expenses.
15. This letter of intent may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Page 31 of 93
If the foregoing properly sets forth our understanding, please so
indicate by signing a copy of this letter in the space provided below and
returning such copy to us.
Very truly yours,
BCE TELECOM INTERNATIONAL
By: /s/ Derek H. Burney
-----------------------------
Name: Derek H. Burney
Title: Chairman and Chief
Executive Officer
By: /s/ Daniel E. Somers
-----------------------------
Name: Daniel E. Somers
Title: Senior Vice-President
and Chief Financial
Officer
Accepted and Agreed:
JONES INTERCABLE, INC.
By: /s/ Elizabeth M. Steele
----------------------------
Name: Elizabeth M. Steele
Title: Vice President and
General Counsel
JONES INTERNATIONAL, LTD.
By: /s/ Glenn R. Jones
----------------------------
Name: Glenn R. Jones
Title: Chairman and Chief
Executive Officer
Only as to paragraphs 1, 5, 6, 7 and 9
/s/ Glenn R. Jones
- -------------------------------
Glenn R. Jones
Page 32 of 93
Bell Canada International Inc.
1000, rue de la Gauchetiere
Montreal, Quebec
Canada H3B 4Y8
March 17, 1994
Glenn R. Jones
Jones International, Ltd.
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80155-3309
Dear Sirs:
Reference is made to the Letter Agreement dated December 2, 1993
among the undersigned (successor to BCE Telecom International Inc.), Jones
International, Ltd., Glenn R. Jones and Jones Intercable, Inc. Each of
the undersigned hereby agrees that clause (i) of paragraph 12 of such
Letter Agreement is amended to be April 8, 1994.
Very truly yours,
BELL CANADA INTERNATIONAL INC.
By:/s/ Daniel E. Somers
--------------------------
Senior Vice-President
ACCEPTED AND AGREED:
JONES INTERCABLE, INC.
By:/s/ Elizabeth Steele
--------------------
Vice President
JONES INTERNATIONAL, LTD.
By:/s/ Glenn R. Jones
---------------------
Chairman
/s/ Glenn R. Jones
- ------------------
Glenn R. Jones
Page 33 of 93
SCHEDULE I
BASIC
MSO (MULTIPLE SYSTEM OPERATOR) SUBSCRIBERS
- ------------------------------ -----------
Tele-Communications, Inc. (TCI) 10,171,000
Time Warner Cable 7,070,000
Continental Cablevision, Inc. 2,913,000
Comcast Corporation 2,647,000
Cablevision Systems Corporation 2,070,000
Cox Cable Communications 1,729,000
Newhouse Broadcasting Corporation 1,353,000
Cablevision Industries, Inc. 1,299,000
Times Mirror Cable Television 1,194,000
Adelphia Communications 1,183,000
Falcon Cable TV 1,099,000
Viacom Cable 1,083,000
Sammons Communications, Inc. 979,000
Century Communications Corp. 919,000
Crown Media, Inc. 823,000
Colony Communications, Inc. 765,000
TeleCable Corporation 699,000
Scripps Howard Cable 678,000
TKR Cable 608,000
Lenfest Group 591,000
KBLCOM, Inc. (Houston Industries) 589,000
InterMedia Partners 537,000
Prime Cable 520,000
Post-Newsweek Cable, Inc. 478,000
TCA Cable TV, Inc. 469,000
Tele-Media Corporation 453,000
Womelco Cable Corp. 428,000
Madison Hunter Cable TV 421,000
Multimedia Cablevision 411,000
Rifkin & Associates, Inc. 366,000
Triax Communications Corp. 334,000
Western Communications, Inc. 318,000
C-TEC Cable 257,000
Page 34 of 93
FINAL
December 1, 1993
TERM SHEET
FOR
STOCK PURCHASE AGREEMENT
BETWEEN
BCETI AND BLACKHAWK
INITIAL At Closing, BCETI (the "Investor") will
TRANSACTIONS purchase (i) 8,400,000 shares of Class A
Common Stock (the "Class A Shares") of
Blackhawk (the "Company") and (ii) a number
of Class A Shares equal to 30% of the Class A
Shares issued pursuant to the proposed asset
purchase transaction with the Parent of
Blackhawk (approximately 1,600,000 Class A
Shares).
The purchase price for these initial
investments will be $27.50 per Class A Share.
INVESTMENT In addition to the initial transactions
COMMITMENT described above, Investor will subscribe for
30% of any shares sold pursuant to subsequent
equity offerings by the Company, provided
that this subscription obligation will
terminate when the aggregate amount of
Investor's purchases of equity securities
from the Company (including the approximately
10,000,000 Class A shares purchased pursuant
to the initial investments) equals $400
million.
PRE-EMPTIVE Investor will have the right to maintain its
RIGHTS then percentage equity interest in the case
of all issuances by the Company of equity
securities (other than routine grants of
stock options and related issuances).
REGISTRATION Investor will have customary demand
RIGHTS registration rights with respect to any
equity securities of Blackhawk purchased from
time to time.
Page 35 of 93
STANDSTILL Investor will agree to vote all equity
AGREEMENT securities of the Company held by it in favor
of the Company's nominees to the Board of
Directors. Without the written consent of
the Company, in no event will Investor
solicit proxies with respect to the Company's
equity securities, become a participant in
any election contest or join any group
seeking to acquire, hold or dispose of equity
securities of the Company.
BOARD The Board of Directors of the Company will
REPRESENTATION initially have ten directors, elected as
follows:
(i) six directors will be nominated by
Glenn Jones and Jones International, Ltd.
(collectively, "Jones"), one of which will
not be affiliated with Jones,
(ii) three directors will be nominated
by Investor, and
(iii) one unaffiliated director will be
nominated jointly by Investor and Jones.
Each of Investor, Jones and the Company will
use all reasonable efforts to elect the
foregoing nominees to the Board. If the
holders of the Class A Shares elect three
directors that are not nominated by Company,
(i) five of the seven remaining directors
will be nominated by Jones and two by
Investor and (ii) at Jones' option, the Board
of Directors may be increased to twelve, in
which case seven of the directors to be
nominated by holders of Common Stock will be
nominated by Jones and two by Investor. The
Board of Directors will have an executive
committee, audit committee and compensation
committee and Investor will have not less
than one director on each such committee.
Investor undertakes, to the extent permitted
by law, to vote its shares in the Company and
direct its nominees to the Board so as to
insure that the directors nominated by Jones
will represent at least a majority of the
members of the Board.
Page 36 of 93
CONSENT RIGHTS Investor to have the right of consent to the
following actions by the Company:
(i) the authorization or issuance of
equity securities (including stock splits and
stock dividends, but other than routine
grants of stock options and related
issuances),
(ii) any amendments to the Articles of
Incorporation or By-Laws of the Company,
(iii) the placement of new long-term
indebtedness exceeding in any single case
$100,000,000 and $200,000,000 in the
aggregate, but excluding bank credit
arrangements entered into from time to time
to finance general corporate purposes having
a principal amount not exceeding
$500,000,000,
(iv) the acquisition or sale of any
cable television system having a purchase
price exceeding $50,000,000 in any single
case and $250,000,000 in the aggregate for
acquisitions and $250,000,000 in the
aggregate for sales,
(v) the acquisition or sale of any
Business (as defined below) (other than a
cable television system) having a purchase
price exceeding $5,000,000 in any single case
and $50,000,000 in the aggregate for
acquisitions and $50,000,000 in the aggregate
for sales,
(vi) the entry by the Company into a
line of business other than a Business,
(vii) the taking of any action that would
reasonably be expected to, as a result of a
law or regulation, (x) require Investor to
divest any of its equity interest in the
Company or (y) prevent the Investor from
obtaining control of the Company, or
(viii) the sale of substantially all of
the assets of the Company, a liquidation, a
merger where the Company is not the surviving
Page 37 of 93
corporation and such other fundamental
changes as agreed by the parties.
CONSULTATION The Company will regularly advise and
ON BUSINESS consult with Investor in respect of its
STRATEGIES strategic, operating and financial plans,
including plans for system acquisitions and
sales (both as they relate to managed limited
partnerships and third party transactions);
equity, debt, joint venture and other
financing strategies; business plans for
operations, marketing and technology
deployment; and personnel, compensation and
related decisions. Each year, management of
the Company will present to the Board of
Directors for approval a business plan
including the elements described above.
SCOPE OF Investor and Jones recognize that the cable
RELATIONSHIP television and telecommunications businesses
are rapidly evolving. The parties will
consult with each other regarding possible
new converging business segments and markets,
such as the delivery of value added,
inter-exchange and wireless services.
OBLIGATION TO Each of BCETI and Jones will have an
REFER BUSINESS obligation to refer, and will cause
OPPORTUNITIES entities owned or controlled by them to
refer, to the Company business opportunities
in (A) any Business described in paragraphs
(i), (ii) and (iii) of the definition, (B)
any business that has a fair market value
less than the then market capitalization of
the Company and is primarily engaged in
wireline local exchange communications
businesses in geographic markets in the
United States where the Company does not own
or operate a cable television or wireline
local exchange communications business, and
(C) such other businesses as may be agreed by
the Investor and Jones. Prior to closing,
Investor and Jones will review the businesses
described in clause (iv) of the definition of
"Business" and discuss whether any such
businesses should be added to this referral
obligation.
Page 38 of 93
BUSINESS "Business" means the following lines of
business in the United States of America:
(i) cable television businesses,
(ii) wireline local exchange
communications businesses in geographic
markets where the Company owns or operates a
cable television business, and
(iii) transport of broadband inter-active
multi-media businesses in geographic markets
where the Company owns or operates a cable
television or wireline local exchange
communications business, and
(iv) any other existing businesses
conducted by the Company and its immediate
Parent.
The parties agree that Business does not
include (i) the provision of PCS/PCN
services, but includes the lease of
distribution systems to PCS/PCN service
providers and (ii) the provision of content
(other than existing businesses described in
paragraph (iv) above).
If a party votes against an investment by the
Company in any of the foregoing business
opportunities, such party will not
independently invest in such business
opportunity.
SECONDMENT OF Investor will have rights to second an agreed
PERSONNEL BY number of qualified personnel at appropriate
INVESTOR levels of responsibility into the various
business disciplines of the Company. Company
to have reasonable consent rights over the
identity of such secondees. The parties
agree that one of such secondees to the
Company will interface with FinCo to identify
and pursue investment opportunities for the
Company.
Page 39 of 93
EMPLOYMENT OF Company will enter into employment agreement
CHAIRMAN/CEO with Chairman/CEO, pursuant to which he will
receive annual compensation commensurate with
his aggregate current compensation from the
Company and its immediate Parent. The
agreement will expire at the earlier of (i)
the end of the eighth year after closing or
(ii) the closing of the exercise of the
option granted by Jones to Investor on the
Common Stock of the Company. Investor agrees
that Chairman/CEO will spend part of his time
performing similar duties on behalf of
affiliated companies.
PROGRAMMING Programming services of affiliates of BCETI
SERVICES PROVIDED and Jones will be carried on the Company's
BY AFFILIATES OF cable television systems on the following
BCETI AND JONES basis:
(i) Programming services provided by
affiliates of Jones will be given access to
six channels. Jones will have priority over
Investor with respect to these channels.
(ii) Investor will have the right to two
channels for programming services provided by
its affiliates.
(iii) Investor will have no rights under
clause (ii) to designate a programming
service that has substantially similar
content to the services provided by Jones in
clause (i).
CABLE BROKERAGE Investor and Jones will collaborate and
SERVICES consult on potential acquisitions and
dispositions by the Company. The Company
will pay fees to financial services
affiliates of Jones (collectively, "FinCo")
for cable brokerage services to the Company
in connection with future acquisitions and/or
sales that are identified or pursued on
behalf of the Company by FinCo and for which
it provides to the Company customary
brokerage, finders and investment banking
services. The fees paid in connection with
such transactions will be approximately 90%
Page 40 of 93
of the fees that would be charged by
unaffiliated third parties, subject to
approval by the independent directors. No
fees will be payable to FinCo in respect of
any transactions involving the Company's
managed limited partnerships.
FinCo will pay to Investor 50% of any fees
received by it under this arrangement, net of
reasonable and customary expenses incurred by
FinCo.
TRANSACTIONS Investor to acknowledge that certain services
WITH AFFILIATES have historically been provided by the
OF JONES the Company to affiliates of Jones, and by
such affiliates to the Company. Services
provided by the Company principally include
certain management, operational, aviation and
financial and investor services in the U.S.,
U.K. and Spain. Services provided to the
Company principally include the lease of
certain real estate, the lease of satellite
transponder capacity, management information
services and certain financial services.
Such services (which are described in the
draft proxy statements delivered to Investor)
will continue to be provided for a period of
eight years following closing, on terms and
conditions consistent with those as are
currently in effect.
Transactions with affiliates of Jones other
than those described in the immediately
preceding paragraph would be subject to
approval by the Board, excluding directors
nominated by Jones other than the
unaffiliated directors.
TECHNICAL SERVICES The Company and Investor will negotiate a
TO BE PROVIDED BY technical services agreement pursuant to
INVESTOR to which Investor will receive an annual fee
of $2,000,000 for such services.
SUPPLIER The Company will give Investor and its
ARRANGEMENTS affiliates the first opportunity to supply
services, compatible network equipment and
systems to the Company on competitive terms
Page 41 of 93
and conditions which will, at the Company's
discretion, be made pursuant to competitive
bidding or other processes. Nothing herein
will adversely affect the Company's ability
to obtain services, equipment and systems on
open and competitive terms.
TRANSACTIONS Transactions with affiliates of Investor
WITH AFFILIATES would be subject to approval by the Board,
OF INVESTOR excluding directors nominated by Investor.
FINANCIAL Upon closing of the initial investment,
ADVISORY Company will pay (i) a financial advisory fee
FEE of $2,000,000 to its financial services
affiliate and (ii) $600,000 to Investor to
cover its expenses. Investor and Company
will each be responsible for other brokerage,
financial services or similar fees and
expenses which each may incur in connection
with the transaction.
INVESTMENT Investor may assign its rights to a
ENTITY controlled affiliated entity (which entity
must continue to be controlled by Investor),
but no such assignment will relieve Investor
of its obligations hereunder. The investing
entity used by Investor will not, directly or
indirectly, issue debt or equity interests
to, nor invest in or lend money to, entities
primarily engaged in the cable television,
telecommunications or educational programming
businesses. Investor will notify Jones if it
issues equity interests to unaffiliated third
parties.
TERMINATION The rights of Investor will terminate as
OF INVESTOR'S described in Schedule I.
RIGHTS
TERMINATION OF If Investor purchases the Optioned Securities
RELATIONSHIPS (as defined in the other term sheet), the
WITH JONES rights and obligations described above of
Jones and its affiliates will terminate,
provided that the contracts relating to
programming services provided by affiliates
Page 42 of 93
of Jones will survive for fifteen years after
the closing of the initial investment by
Investor in the Company. After the closing
of the purchase of the Optioned Securities,
the rates and other terms and conditions for
any such programming services will be no less
favorable to Jones than those in effect
immediately prior to such closing and will be
subject to adjustments thereafter that are
similar to adjustments obtained by Jones from
other cable operators with comparable
distribution, if any.
Page 43 of 93
SCHEDULE I
Termination of Investor's Rights:
PARA- OWNERSHIP PERCENTAGE TIME EXISTENCE BOARD CONSENT
GRAPH OR NUMBER OF SHARES PERIOD OF OPTION SEATS RIGHTS
- ----- ------------------- ------ --------- ----- ------
1 Ownership of at least
10,000,000 shares 5 years Yes or no 3 All
2 Ownership of at least
10,000,000 shares Years 6-8 Yes 3 All
3 Ownership of at least Depends on %
10,000,000 shares Years 6-? No ownership below
If Investor owns less than 10,000,000 shares, or Paragraph 3
applies, the following matrix will govern:
PARA- OWNERSHIP PERCENTAGE TIME EXISTENCE BOARD CONSENT
GRAPH OR NUMBER OF SHARES PERIOD OF OPTION SEATS RIGHTS
- ----- ------------------- ------ --------- ----- ------
A Ownership of at
least 20% of total
O/S shares All times Yes or no 3 All
B Ownership of less
than 20% but at
least 15% of total
O/S shares All times Yes 3 All
C Ownership of less
than 20% but at
least 15% of total (ii),
O/S shares All times No 2 (vii)
D Ownership of less
than 15% but at (ii),
least 10% of total (vii),
O/S shares All times Yes 1 (viii)
E Ownership of less
than 15% but at
least 10% of total
O/S shares All times No 1 (vii)
Page 44 of 93
PARA- OWNERSHIP PERCENTAGE TIME EXISTENCE BOARD CONSENT
GRAPH OR NUMBER OF SHARES PERIOD OF OPTION SEATS RIGHTS
- ----- ------------------- ------ --------- ----- ------
F Ownership of less (ii),
than 10% of total (vii),
O/S shares All times Yes 1 (viii)
G Ownership of less
than 10% of total
O/S shares All times No 0 None
Page 45 of 93
FINAL
December 1, 1993
TERM SHEET
FOR
SHAREHOLDER AND
OPTION AGREEMENT
VOTING Each of BCETI and Jones will take all action
as may be required to vote for all of their
respective nominees to the Board of
Directors.
RIGHT TO PURCHASE Subject to terms and conditions set forth
COMMON STOCK OF below, at any time between the seventh
BLACKHAWK and eighth anniversary of the closing,
Investor will have the right (the "Control
Option") to purchase from Chairman/CEO and
International (collectively, the "Grantors"),
all of the shares of Common Stock of
Blackhawk (the "Optioned Shares") and all
options on shares of Common Stock of
Blackhawk (the "Optioned Options"), in each
case owned by the Grantors after consummation
of the proposed transaction between Blackhawk
and its immediate Parent. The parties
understand that the Control Option will cover
(i) approximately 2,500,000 Optioned Shares
and (ii) Optioned Options exercisable into
approximately 600,000 shares of Common Stock.
The Optioned Shares and the Optioned Options
are referred to herein as the "Optioned
Securities".
At the time Grantors grant the Control
Option, which is anticipated to be
immediately following consummation of the
proposed asset purchase transaction between
Blackhawk and its immediate Parent, Investor
will pay to Grantors an amount in cash equal
to: (i) $20.00 for each Optioned Share and
(ii) for each Optioned Option, the product
of (A) the number of shares of Common Stock
covered by such Optioned Option and (B) the
difference between $20.00 and the exercise
Page 46 of 93
price of such Optioned Option. Such amount
shall not be applied to the purchase price
for the Optioned Securities described below.
Such right will be non-assignable (except as
otherwise contemplated herein), may only be
exercised in full, and failure to exercise
such right before the eighth anniversary of
the closing shall result in termination of
this option.
1. In the event of death or incapacitation
(an "Event") of Chairman/CEO, Investor
shall have the immediate right to
purchase the Optioned Securities. Such
right shall be effective for a period of
nine months following an Event, after
which period Investor's right to
purchase the Optioned Securities shall
terminate.
2. In the event the Chairman/CEO resigns
from the Company, Investor will have the
immediate right to purchase the Optioned
Securities. Such right shall be
effective for a period of three months
following the date of such resignation.
The failure of Investor to exercise its
right during such three month period
will not terminate the option.
3. At any time after the fifth anniversary
of the closing, the Grantors may request
that Investor exercise its right to
purchase the Optioned Securities.
Investor shall then have a period of six
months to exercise its right, after
which period Investor's right to
purchase the Optioned Securities shall
terminate.
PURCHASE PRICE The purchase price per share for each of the
PER SHARE Optioned Shares will be equal to the sum of:
(i) the product of two-thirds and the
Option Price on the Trigger Date; plus
(ii) the product of one-third and 120%
of Fair Market Value on the Trigger Date.
Page 47 of 93
The purchase price for each share covered by
an Optioned Option shall be equal to the
price per share paid for the Optioned Shares.
The purchase price shall be payable in cash
or, by mutual agreement, in shares of
Investor's Parent or ultimate Parent.
"Fair Market Value" means the average of the
reported closing prices during the 30 day
period immediately preceding the Trigger Date
for Class A Shares. If no liquid public
market for the Class A Shares exists, then
Fair Market Value shall be determined by
appraisal pursuant to an agreed process.
"Option Price" has the meaning set forth in
Schedule I.
"Trigger Date" means (i) the date of an Event
in the case of paragraph 1, (ii) the date
Chairman/CEO resigns in the case of paragraph
2, (iii) the date Grantors deliver a request
notice in the case of paragraph 3, (iv) the
date Investor delivers an exercise notice in
the case of an exercise by it after the
seventh anniversary, and (v) in the case of a
purchase of Class A Shares because of a
Change in Law, the date Investor delivers the
Offer Notice (as defined in the next
paragraph).
CHANGE IN LAW If a Change in Law (to be defined) requires,
directly or indirectly, Investor to divest
the Control Option, or would prevent Investor
from exercising the Control Option, the
Control Option will become transferable on
the terms and conditions described herein,
provided that this provision will not apply
if it was triggered by the entry by Investor
(or its affiliates) into a new line of
business. In any such event, if Investor
elects to dispose of the Control Option and
its Class A Shares, Investor and Grantors
will use reasonable efforts to identify a
suitable partner to purchase the Control
Option and the Class A Shares held by
Investor. Investor will give Grantors
written notice of such election (the "Offer
Notice").
Page 48 of 93
Prior to transferring the Control Option to a
third party, Investor will first offer the
Control Option to Grantors at a specified
price. Grantors will then have nine months
to decide whether to purchase the Control
Option. If Grantors elect to purchase the
Control Option, they may also elect to
purchase all (but not less than all) of the
shares of common stock of Blackhawk then held
by Investor at a price per share equal to
Fair Market Value. In the event Grantor
elects not to purchase the Control Option,
Investor has a period (to be agreed) during
which it may sell the Control Option to a
third party at a price not less than 95% of
the offering price to Grantors, provided that
Investor will consult with Jones before
making any such sale and consider Jones'
views as to the suitability of potential
purchasers.
RIGHT TO PURCHASE Investor acknowledges that Grantors own a
CLASS A COMMON number of shares of Class A Common Stock
STOCK OF BLACKHAWK of Blackhawk (the "Class A Shares"), which
Grantors may wish to sell over time. Subject
to the terms and conditions described below,
until the eighth anniversary of the Closing
Date, Grantors may not sell any Class A
Shares without first offering such Class A
Shares to Investor.
(i) Grantors may sell up to 15,000
Class A shares in any calendar month, without
any obligation to offer such Class A Shares
to Investor.
(ii) If a Grantor wishes to sell any
Class A Shares in a transaction not described
in paragraph (i), such Grantor will first
offer such Class A Shares to Investor.
Grantor shall first deliver a written offer
notice to Investor specifying the number of
Class A Shares offered for sale (the "Offered
Shares") and the average of the closing bid
and asked prices for the Class A Shares as of
the last business day preceding the day the
offer notice is delivered (the "Offered
Price"). Investor will have 24 hours to
decide whether to purchase the Offered Shares
at the Offered Price, provided that Investor
Page 49 of 93
will have five business days to make such
determination if the aggregate purchase price
of the Offered Shares, together with any
other amounts paid by Investor to the
Grantors pursuant to this paragraph (ii)
during the immediately preceding 30 days,
exceeds $10,000,000.
If Investor fails to deliver a written
purchase notice to a Grantor within the time
periods described in paragraph (b), such
Grantor is free to sell the Offered Shares in
open market transactions or private
transactions to any company or individual not
primarily engaged in North American cable
television or North American
telecommunications businesses.
Investor shall have five business days to
close the purchase of Offered Shares, except
that such period will be extended to 30 days
in the case of offers for which Investor has
five business days to respond. The purchase
price shall be payable in cash or, by mutual
agreement, in shares of Investor's Parent or
ultimate parent.
In no event will Grantors be permitted to
sell more that 900,000 Class A Shares in any
12 month period without Investor's consent.
If Grantors wish to sell more than 900,000
Class A Shares in any 12 month period for tax
or estate planning purposes or for other
unanticipated bona fide liquidity needs,
Grantors, Investor and the Company will use
reasonable efforts to develop a plan of
orderly disposition that takes into account
the Company's projected offerings of equity
securities during such 12 month period, if
any.
PURCHASE OF SHARES If Investor decides to purchase more than
BY INVESTOR 15,000 Class A Shares in any calendar month,
Investor will first give Grantors the
opportunity to sell Class A Shares. Grantors
will have 48 hours to respond pursuant to
procedures similar to those described above.
Page 50 of 93
SCHEDULE I
The Option Price on any Trigger Date will be based on the
following table:
Anniversary
of the
Closing Date Base Price
------------ ----------
0 $30.00
1 40.32
2 45.16
3 50.58
4 56.65
5 63.44
6 71.06
7 79.58
8 89.13
The Option Price will equal the sum of:
(i) the Base Price on the anniversary of the Closing Date
immediately preceding the Trigger Date, and
(ii) a pro rata portion of the difference between such Base
Price and the Base Price on the immediately succeeding
anniversary of the Closing Date.
The Base Price will be reduced by the amount of any special
dividends paid or declared by the Company to Grantors prior to
the purchase of the Optioned Securities.
Page 51 of 93
TERM SHEET December 1, 1993
FOR FINAL
INVESTMENT IN
JONES EDUCATION NETWORK, INC.
INVESTMENT At Closing, BCETI (the "Investor") will
purchase a number of shares of Class A Common
Stock of Jones Education Networks, Inc. (the
"Company") equal 15% of the outstanding shares
of the Company.
The purchase price of the shares will be
$18,000,000. If during the twelve month period
following Closing the Company issues new equity
securities solely for cash at a price per share
less than the price paid by Investor, then the
Company will pay to Investor an amount in cash
equal to the difference (which amount, in
Company's discretion, may be paid in equity
securities of the Company at the most recent
valuation). If during the twelve month period
following Closing the Company issues new equity
securities for consideration, in whole or in
part, other than cash at a price per share less
than 90% of the price paid by Investor, then
the Company will pay to Investor an amount in
cash equal to the difference between 90% of the
price paid by Investor and the value of the
consideration paid by the other party (which
amount, in the Company's discretion, may be
paid in equity securities of the Company at the
most recent valuation). The valuation of any
non-cash consideration will be determined under
normal and appropriate industry standards, such
valuation to be approved by the Company's Board
of Directors.
PRE-EMPTIVE Investor will have the right to maintain
RIGHTS its then percentage equity interest in the case
of all issuances by the Company of equity
securities (other than routine grants of stock
options and related issuances and other than
through an initial public offering).
Investor will receive registration rights
subsequent to an initial public offering.
Page 52 of 93
HYPOTHECATION Investor recognizes that Glenn R. Jones and
Jones International, Ltd. ("Blackhawk") reserve
the right to pledge or hypothecate its
ownership interests in Company for financing
purposes.
BOARD Investor will be entitled to nominate one
REPRESENTATION member to the Board.
Investor will have one representative on all
committees of the Board of Directors.
DIVESTITURE In the event that Investor wishes to divest
ownership in Company for any reason, Investor
will offer its interests in Company to
Blackhawk at a specified price. Blackhawk will
have three months to accept, reject or
renegotiate the purchase of Investor's
interests. If Blackhawk accepts the offer, it
will have an additional six months to close on
the purchase of the interests. If Blackhawk
rejects the offer, or if Blackhawk is unable to
close on the purchase, Investor may, after
reasonable consultation with Blackhawk, sell
its interests at a price no less than 95% of
the offered price referred to above for a
period of nine months subsequent to such
rejection or failure to close.
MOST FAVORED For a period of five years subsequent to
NATIONS closing, any Board of Director consent rights
CLAUSE granted to a subsequent 15% or less investor in
Company shall also be awarded to Investor.
NOTICE OF Company will give Investor notice of any
AFFILIATE material affiliated transactions.
TRANSACTIONS
AUDITED Commencing with the fiscal year ended May 31,
FINANCIAL 1994, Company will deliver audited financial
STATEMENTS statements to Investor.
CONSULTATION The Company will regularly advise and consult
ON BUSINESS with Investor in respect of its strategic,
STRATEGIES operating and financial plans, equity, debt,
joint venture and other financial strategies;
business plans for operations, marketing and
technology deployment; and personnel,
compensation and related decisions. Each year,
management of the Company will present to the
Page 53 of 93
Board of Directors for approval a business plan
including the elements described above.
TAG ALONG In the event that, through a single sale or a
RIGHTS series of sales, Blackhawk has divested or will
divest more than 50% of its ownership of
Company or has divested or will divest control
of the Company, Investor shall have the right
to (i) participate on a pro rata basis in such
sales by Blackhawk or (ii) sell all of its
interests, all upon the same terms and
conditions as Blackhawk. In the event that
Blackhawk sells all of its interests, it may
require that Investor sell all of its interests
concurrently.
Tag along rights will expire upon the event of
a public offering.
Page 54 of 93
TERM SHEET December 1, 1993
FOR FINAL
INVESTMENTS IN
JONES LIGHTWAVE, LTD.
INVESTMENT At Closing, BCETI (the "Investor") will purchase a
number shares of Class A Common Stock of Jones
Lightwave, Ltd. (the "Company") equal to 50% of
the outstanding common shares of the Company.
The purchase price for the shares will be
$5,000,000.
PRE-EMPTIVE Investor will have the right to maintain its then
RIGHTS percentage equity interest in the case of all
issuances by the Company of equity securities
(other than routine grants of stock options and
related issuances).
TAG ALONG Investor will receive prior notice of any sales
RIGHTS by Glenn R. Jones or Jones International, Ltd.
("Blackhawk") of equity securities in the Company.
Investor will have the right to participate, on a
pro rata basis, in any such sales and will receive
the same price per share paid to Blackhawk.
RIGHT OF If Investor or Blackhawk elects in its discretion,
FIRST OFFER to sell or dispose of its equity interest in the
Company to an unaffiliated third party, the other
party will have a right of first offer on the
selling party's equity interest.
BOARD Blackhawk shall have the right to name the
REPRESENTA- Chairman of the Board (who shall also be a Board
TION member). Remaining Board members shall be
nominated 50% by Blackhawk and 50% by Investor.
DISPUTE If the parties are unable, after a reasonable
RESOLUTION period of consultation and discussion, to reach
agreement on a material business issue confronting
the Company, Investor agrees that it will offer to
sell to Blackhawk its equity interests in the
Company at fair market value pursuant to an agreed
procedure.
CONSENT Investor to have the right of consent to the
RIGHTS following actions by the Company (so long as
investor owns at least 50% of equity securities of
Page 55 of 93
the Company or so long as Investor's interests are
at least equal to Blackhawk's interests):
(i) the authorization or issuance of equity
securities (including stock splits and
stock dividends, but other than routine
grants of stock options and related
issuances),
(ii) any amendment to the Articles of
Incorporation or By-Laws of the Company,
(iii) the placement of material new long-term
indebtedness exceeding in any single case
$1,000,000 and $2,500,000 in the
aggregate, but excluding bank credit
arrangements entered into from time to
time finance general corporate purposes
having a principal amount not exceeding
$2,500,000,
(iv) any material acquisitions or sales,
(v) the annual business plan of the Company,
(vi) the entry by the Company into a new line
of business,
(vii) the taking of any action that would
reasonably be expected to, as a result of
a law or regulation, require Investor to
divest any of its equity interest in the
Company, or
(viii) the sale of substantially all of the
assets of the Company, a liquidation, a
merger where the Company is not the
surviving corporation and such other
fundamental changes as agreed by the
parties.
CONSULTATION The Company will regularly advise and consult with
ON BUSINESS Investor in respect of its strategic, operating
STRATEGIES and financial plans; equity, debt, joint venture
and other financial strategies; business plans for
operations, marketing and technology deployment;
and personnel, compensation and related decisions.
Investor acknowledges the Company currently
utilizes and would anticipate continuing to
Page 56 of 93
utilize limited partnerships for the raising of
capital for subsidiaries and affiliates of
Company.
SECONDMENT Investor will have rights to second an agreed
OF PERSONNEL number of personnel at appropriate levels of
BY INVESTOR responsibility. Company will have reasonable
consent rights over the identity of secondees.
TRANSACTIONS Transactions with affiliates of Blackhawk would be
WITH AFFILIATES subject to approval by the Board, excluding
OF BLACKHAWK directors nominated by Blackhawk.
TRANSACTIONS Transactions with affiliates of Investor would be
WITH AFFILIATES subject to approval by the Board, excluding
OF INVESTOR directors nominated by Investor.
LOAN BY Investor shall lend U.S. $5,000,000 to Company at
INVESTOR Closing on terms and conditions reasonably
acceptable to Investor.
Page 57 of 93
EXHIBIT 2
CONFORMED COPY
INVESTMENT AGREEMENT
AGREEMENT dated March 25, 1994 between Bell Canada International
Inc., a Canadian corporation (the "Purchaser"), and Jones Intercable, Inc.,
a Colorado corporation (the "Company").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) The following terms, as used
herein, have the following meanings:
"Basic Prospectus" means the prospectus dated June 17, 1993
included in the Registration Statement relating to the Shelf Securities,
and the Disclosure Documents incorporated by reference therein.
"Class A Common Stock" means Class A Common Stock, par value
$0.01 per share, of the Company.
"Common Stock" means Common Stock, par value $0.01 per share, of
the Company.
"Disclosure Documents" means (i) the Company's Annual Report on
Form 10-K for the fiscal years ended May 31, 1992 and May 31, 1993, (ii)
the Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
August 31 and November 30, 1992 and February 28, August 31 and November 30,
1993, (iii) the Company's Proxy Statements dated December 18, 1992 and
November 19, 1993, (iv) the Company's Current Reports on Form 8-K filed on
February 19, 1993, March 1 and 15, 1993, June 15, 1993, December 3, 1993,
January 11, 1994, February 23, 1994 and (v) the Company's Form 10-C filed
on March 1, 1993.
"Dollars" or "$" means United States dollars.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Page 58 of 93
"Governmental Authority" means any local, county, state,
commonwealth, federal or foreign court, judicial, executive, or legislative
instrumentality, or any agency, authority, commission, board or official
thereof, including, without limitation, any franchising authority.
"Intercable Group" means, at any time, the Company and each
Person that is a Subsidiary of the Company at such time.
"Intercable Group Entity" means, at any time, each Person
included in the Intercable Group at such time.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the condition (financial or otherwise),
business, assets or results of operations of such Person and its
Subsidiaries, taken as a whole.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Proposed Transaction" means the transaction contemplated by the
letter agreement dated December 2, 1993 among the Company, the Purchaser,
Glenn R. Jones and Jones International, Ltd.
"Prospectus" means the Basic Prospectus, as supplemented by the
Prospectus Supplement.
"Prospectus Supplement" means the prospectus supplement dated
March 25, 1994 specifically relating to the Shares in the form delivered to
the Purchaser at the Closing, and the Disclosure Documents incorporated by
reference therein.
"Registration Rights Agreement" means the Registration Rights
Agreement between the Purchaser and the Company dated the date hereof.
"SEC" means the Securities and Exchange Commission or its
successor.
Page 59 of 93
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Subsidiary" means, as to any Person, (i) any entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are, directly or indirectly, owned or controlled by such
Person, (ii) any partnership of which such Person is, directly or
indirectly, a general or managing partner or (iii) any other entity that
is, directly or indirectly, controlled by such Person.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
Closing 2.2
Outstanding Securities 3.5
Registration Statement 3.7
Shares 2.1
Shelf Securities 3.7
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. The Company hereby agrees to issue and
sell to the Purchaser, and the Purchaser hereby agrees to purchase from the
Company, 2,500,000 shares of Class A Common Stock (the "Shares") for a
purchase price of $22.00 per Share.
2.2 Closing Deliveries. (a) In connection with the closing (the
"Closing") of the purchase and sale of the Shares hereunder:
(i) the Purchaser shall deliver to the Company
$55,000,000 in immediately available funds by wire
transfer to an account of the Company with a bank
designated by the Company;
(ii) the Company shall deliver to the Purchaser a
certificate representing the Shares, duly registered in
the name of the Purchaser;
(iii) the Purchaser and the Company shall execute
and deliver the Registration Rights Agreement;
Page 60 of 93
(iv) the Purchaser shall receive an opinion of
Elizabeth M. Steele, counsel to the Company;
(v) the Company shall receive an opinion of
Martine Turcotte and Robert Drolet, counsel to the
Purchaser; and
(vi) the Company shall deliver to the Purchaser
all documents it may reasonably request relating to the
existence of the Company and the authority of the
Company to execute and deliver this Agreement and the
Registration Rights Agreement, all in form and
substance reasonably satisfactory to the Purchaser.
(b) All deliveries and transactions at the
Closing shall be deemed to take place simultaneously.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser:
3.1 Corporate Existence. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of
Colorado and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
on the Company. The Company has heretofore delivered to the Purchaser true
and complete copies of its articles of incorporation and bylaws as
currently in effect.
3.2 Corporate Power and Authorization. The execution, delivery
and performance by the Company of this Agreement and the Registration
Rights Agreement are within the Company's corporate powers and have been
duly authorized by all necessary corporate action on the part of the
Company. This Agreement and the Registration Rights
Page 61 of 93
Agreement constitute valid and binding agreements of the Company.
3.3 Governmental Authorization. Assuming the accuracy of the
Purchaser's representations and warranties contained in Section 4.3, the
execution, delivery and performance by the Company of this Agreement and
the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby require no action of any Intercable Group
Entity by or in respect of, or filing by any Intercable Group Entity with,
any Governmental Authority organized within the United States of America,
England or Spain, other than any such action or filing as to which the
failure to make or obtain would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
3.4 Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the Registration Rights Agreement do not:
(i) violate the articles of incorporation or by-laws of the Company, (ii)
assuming the accuracy of Purchaser's representations and warranties
contained in Section 4.3, violate any applicable law, rule, regulation,
judgment, injunction, order or decree, (iii) require any consent or other
action by any Person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of any right or
obligation of any Intercable Group Entity under, or cause a loss of any
benefit to which such Intercable Group Entity is entitled under, any
agreement or other instrument binding upon any Intercable Group Entity or
any franchise, license, permit or other similar authorization held by any
Intercable Group Entity or (iv) result in the creation or imposition of any
Lien on any asset of any Intercable Group Entity, except in the case of
clauses (ii), (iii) and (iv), to the extent that any such violation,
failure to obtain any such consent or other action, default, right, loss or
Lien would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company.
3.5 Capitalization of the Company. (a) At the date hereof, but
without giving effect to the issuance of the Shares:
(i) the Company's authorized capital stock
consists of (A) 5,550,000 shares of Common Stock, of
which 5,498,539 shares are issued and 4,913,021 shares
are outstanding, and (B) 30,000,000 shares of Class A
Common Stock, of which 13,520,502 shares are issued and
12,275,088 shares are outstanding,
Page 62 of 93
(ii) there are outstanding employee stock options
to purchase an aggregate of 200,000 shares of Common
Stock and 852,628 shares of Class A Common Stock,
(iii) there are outstanding $19,468,000 principal
amount of 7.5% Convertible Debentures due June 1, 2007
of the Company, which are convertible into 1,289,272
shares of Class A Common Stock, and
(iv) the Company holds (a) 585,518 shares of
Common Stock and (b) 1,245,414 shares of Class A Common
Stock in its treasury.
(b) Except as set forth in paragraph (a) of this Section 3.5, as
of the date hereof there are no outstanding (i) shares of capital stock or
other voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, or (iii) options or other rights to acquire from
the Company, or other obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses
(i), (ii) and (iii) being referred to collectively as the "Outstanding
Securities"). There are no outstanding obligations of any Intercable Group
Entity to repurchase, redeem or otherwise acquire any Outstanding
Securities.
(c) To the knowledge of the Company, there are no voting trusts,
shareholder agreements or any other agreements or understandings with
respect to the voting of any shares of capital stock of the Company other
than those so created by the articles of incorporation and by-laws of the
Company.
3.6 Due Authorization and Validity of the Shares. The Shares have
been duly authorized and, when delivered against payment therefor will be,
validly issued, fully paid and non-assessable. The Shares are not subject
to any preemptive or similar right, and will be delivered to Purchaser free
and clear of any Lien.
3.7 The Registration Statement and the Prospectus. (a) On June
18, 1993 the Company filed with the SEC a registration statement on Form S-
3 (Registration No. 33-64602) (together with exhibits thereto, the
"Registration Statement") relating to 6,000,000 shares of Class A Common
Stock to be issued from time to time by the Company (the "Shelf
Securities").
Page 63 of 93
(b) The Registration Statement was declared effective by the SEC
on July 7, 1993. Each part of the Registration Statement, when such part
became effective, did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
(c) No stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or threatened by the SEC.
(d) The Registration Statement and the Prospectus comply in all
material respects with the Securities Act. The Registration Statement and
the Prospectus do not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus does not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
3.8 Disclosure Documents. (a) The Company has delivered to the
Purchaser all reports, statements, schedules and registration statements
(including documents incorporated by reference therein) filed with the SEC
by the Company since May 31, 1992, including the Disclosure Documents.
(b) The Company has duly filed with the SEC each Disclosure
Document, and each such Disclosure Document when it was filed complied in
all material respects with the Exchange Act.
3.9 Finders' Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of any Intercable Group Entity who might be entitled to any fee or
commission from the Purchaser or any Intercable Group Entity in connection
with the purchase by the Purchaser of the Shares, provided that the parties
hereto acknowledge that certain such fees will be payable by the
Company in the event the Proposed Transaction is consummated.
Page 64 of 93
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that:
4.1 Corporate Existence. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of
Canada and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Purchaser.
4.2 Corporate Power and Authorization. The execution, delivery
and performance by the Purchaser of this Agreement and the Registration
Rights Agreement are within the corporate powers of the Purchaser and have
been duly authorized by all necessary corporate action on the part of the
Purchaser. This Agreement and the Registration Rights Agreement constitute
valid and binding agreements of the Purchaser.
4.3 Governmental Authorization. Assuming the accuracy of the
Company's representations and warranties contained in Section 3.3, the
execution, delivery and performance by the Purchaser of this Agreement and
the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby require no action by Purchaser by or in
respect of, or filing by Purchaser with, any Governmental Authority
organized within Canada or any other jurisdiction where the Purchaser
conducts material business, other than (a) filings required by the Exchange
Act and (b) any such action or filing as to which the failure to make or
obtain would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Purchaser.
4.4 Non-Contravention. The execution, delivery
and performance by the Purchaser of this Agreement and the
Registration Rights Agreement do not (i) violate the
certificate of incorporation or bylaws of Purchaser, (ii)
assuming the accuracy of the Company's representations and
warranties contained in Section 3.3, violate any applicable
law, rule, regulation, judgment, injunction, order or decree
or (iii) require any consent or other action by any Person
under, or constitute a default under, any agreement or
Page 65 of 93
instrument binding upon the Purchaser, except, in the case
of clauses (ii) and (iii), to the extent that any such
violation, failure to obtain any such consent or take such
other action would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
the Purchaser.
4.5 Finders' Fees. There is no investment
banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the
Purchaser who might be entitled to any fee or commission
from Purchaser or any Intercable Group Entity in connection
with the purchase by the Purchaser of the Shares.
ARTICLE 5
COVENANTS
5.1 Prospectus Supplement. The Company shall
promptly file with, or transmit for filing to, the SEC the
Prospectus Supplement pursuant to Rule 424 under the
Securities Act.
5.2 Observer. From the date hereof until the
date on which the Company or Investor announces that they
are no longer pursuing the Proposed Transaction, the Company
agrees that Investor shall be entitled to designate an
observer to attend meetings of the Board of Directors of the
Company, provided that such observer shall be excluded from
such meetings at all times during which the Board of
Directors is discussing or considering a transaction between
the Company and Investor, or any other matter for which the
attendance of such observer would not be in the best
interests of the stockholders as determined by the
independent directors or the Chairman of the Board. The
Company shall provide such observer with the same notice of
meetings of the Board of Directors as that provided to
directors of the Company.
5.3 NASD Listing. The Company shall promptly
take any action necessary to qualify the Shares for trading
on the NASDAQ National Market System.
Page 66 of 93
ARTICLE 6
MISCELLANEOUS
6.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,
if to the Purchaser, to:
Bell Canada International Inc.
1000, rue de la Gauchetiere West
Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Attention: Chief Financial Officer
Fax: 514-392-2262
with a copy to:
Bell Canada International Inc.
1000, rue de la Gauchetiere West
Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Attention: General Counsel
Fax: 514-392-2342
if to the Company, to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: President
Fax: 303-799-4675
with a copy to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: General Counsel
Fax: 303-799-1644
All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient
thereof if received prior to 5 p.m. in the place of receipt
and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next
succeeding business day in the place of receipt.
6.2 Amendments and Waivers. (a) Any provision
of this Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed, in the
Page 67 of 93
case of an amendment, by each party to this Agreement, or in
the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. Any rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
6.3 Survival. The covenants, representations and
warranties of the parties hereto contained in this Agreement
shall survive for a period of one year after the Closing,
unless otherwise agreed by the parties hereto.
6.4 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
6.5 Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and assigns.
6.6 Governing Law. This Agreement shall be
governed by and construed in accordance with the law of the
State of Colorado, without regard to the conflicts of law
rules of such state.
6.7 Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
6.8 Headings. The headings contained in this
Agreement are for reference purposes only and shall not in
any way affect the meaning of interpretation of this
Agreement.
6.9 Entire Agreement. This Agreement constitutes
the entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written,
between the parties with respect to the subject matter of
this Agreement. No provision of this Agreement is intended
to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Page 68 of 93
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
BELL CANADA INTERNATIONAL INC.
By: /s/ Martine Turcotte
---------------------------
Title: General Counsel and
Corporate Secretary
JONES INTERCABLE, INC.
By: /s/ Elizabeth Steele
---------------------------
Title: Vice President
Page 69 of 93
EXHIBIT 3
CONFORMED COPY
ASSIGNMENT AGREEMENT
--------------------
March 25, 1994
Bell Canada International Inc.
1000, rue de la Gauchetiere West
Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Bell Canada International BVI III Limited
c/o Bell Canada International Inc.
1000, rue de la Gauchetiere West
Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Gentlemen:
Reference is made to the Investment Agreement
dated March 25, 1994 (the "Agreement") between Bell Canada
International Inc. (the "Purchaser") and Jones Intercable,
Inc. (the "Company") pursuant to which the Company has
agreed to sell and the Purchaser has agreed to purchase
2,500,000 shares of the Company's Class A Common Stock, par
value $.01 per share for a purchase price of $22.00 per
share.
The Purchaser hereby assigns all of its rights,
but not its obligations, under the Agreement to Bell Canada
International BVI III Limited ("Bell BVI"), a British Virgin
Islands international business corporation and a wholly-
owned subsidiary of the Purchaser. Bell BVI hereby accepts
from the Purchaser the assignment of Purchaser's rights
under the Agreement and notifies the Company that it will
purchase the Shares pursuant to the terms of the Agreement.
Page 70 of 93
Bell Canada International Inc.
Bell Canada International BVI
III Limited
Jones Intercable, Inc. 2 March 25, 1994
The Company hereby acknowledges the assignment by
Purchaser to Bell BVI of Purchaser's rights, but not
Purchaser's obligations, under the Agreement.
Very truly yours,
BELL CANADA INTERNATIONAL INC.
By /s/ Martine Turcotte
----------------------------
Title: General Counsel and
Corporate Secretary
BELL CANADA INTERNATIONAL BVI
III LIMITED
By /s/ David Raworth
----------------------------
Title: President
Acknowledged:
JONES INTERCABLE, INC.
By /s/ Elizabeth Steele
-----------------------
Title: Vice President
Page 71 of 93
EXHIBIT 4
CONFORMED COPY
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated March 25, 1994 between Bell Canada
International Inc., a Canadian corporation (the "Selling
Shareholder"), and Jones Intercable, Inc., a Colorado
corporation (the "Company").
W I T N E S E T H :
- - - - - - - - -
WHEREAS, on the date hereof, the Selling
Shareholder purchased from the Company 2,500,000 Class A
Shares (as defined below) for an aggregate purchase price of
$55,000,000; and
WHEREAS, the Company wishes to provide to the
Selling Shareholder the rights described herein;
NOW THEREFORE, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. (a) The following
terms, as used herein, have the following meanings:
"Capital Stock" means, at any time, the Common
Shares, the Class A Shares and any other shares of
authorized capital stock of the Company.
"Class A Shares" means the shares of Class A
Common Stock, par value $0.01 per share, of the Company.
"Common Shares" means the shares of Common Stock,
par value $0.01 per share, of the Company.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations
promulgated thereunder.
"Person" means an individual, corporation,
partnership, association, trust or other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
Page 72 of 93
"Registrable Securities" means the 2,500,000 Class
A shares purchased by the Selling Shareholder pursuant to
the Investment Agreement dated the date hereof between the
Selling Shareholder and the Company.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933
as amended, and the rules and regulations promulgated
thereunder.
"Subsidiary" means, as to any Person, (i) any
entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the
board of directors or other persons performing similar
functions are, directly or indirectly, owned or controlled
by such Person, (ii) any partnership of which such Person
is, directly or indirectly, a general or managing partner or
(iii) any other entity that is, directly or indirectly,
controlled by such Person.
"Termination Time" means the date on which the
Company or the Selling Shareholder announces that it is no
longer pursuing the transaction contemplated by the letter
agreement dated December 2, 1993 among the Company, the
Selling Shareholder, Glenn R. Jones and Jones International,
Ltd.
"Underwriter" means a securities dealer who
purchases any Registrable Securities as principal and not as
part of such dealer's market-making activities.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
---- -------
Demand Registration 2.1
Eligible Assignee 5.6
Indemnified Party 4.3
Indemnifying Party 4.3
Inspectors 3.1(g)
Piggy-Back Registration 2.2
Records 3.1(g)
Rule 144 5.2
Page 73 of 93
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Demand Registration. (a) At any
time on or after the Termination Time, the Selling
Shareholder may make a written request for registration
under the Securities Act of all or part of the Registrable
Securities (a "Demand Registration"), provided that the
Company shall not be obligated to effect more than one
Demand Registration pursuant to the provisions of this
Section 2.1 in any nine-month period and provided further
that the Company shall not be obligated to effect more than
three Demand Registrations during the term of this
Agreement. Such request will specify the aggregate number
of shares of Registrable Securities proposed to be sold by
the Selling Shareholder (which shall not be less than
500,000) and will also specify the intended method of
disposition thereof.
(b) A registration will not count as a Demand
Registration until it has become effective. In addition, if
more than 50% of the aggregate number of Registrable
Securities requested to be registered pursuant to this
Section 2.1 are excluded from the offering in accordance
with Section 2.3, such offering will not count as a Demand
Registration.
(c) If the offering of such Registrable
Securities pursuant to such Demand Registration is an
underwritten offering, the Selling Shareholder shall select
the book-running managing Underwriter and any additional
investment bankers and managing Underwriters to be used in
connection with the offering, provided that such
Underwriters and investment bankers must be reasonably
satisfactory to the Company.
SECTION 2.2. Piggy-Back Registration. If on or
after the Termination Time the Company proposes to file a
registration statement under the Securities Act with respect
to an offering of any shares of Capital Stock (i) for the
Company's own account (other than a registration statement
on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC)) or (ii) for the account of any of its
respective securityholders, then the Company shall give
written notice of such proposed filing to the Selling
Shareholder as soon as practicable (but in no event less
than 10 days before the anticipated filing date), and such
notice shall offer the Selling Shareholder the opportunity
to register such number of shares of Registrable Securities
Page 74 of 93
as the Selling Shareholder may request on the same terms and
conditions as the proposed offering (a "Piggy-Back
Registration"). The Selling Shareholder will have five
business days after receipt of any such notice to notify the
Company as to whether it wishes to participate in a Piggy-
Back Registration and, if so, the number of Registerable
Securities proposed to be included in such offering.
SECTION 2.3. Reduction of Offering.
Notwithstanding anything contained herein, if the book-
running managing Underwriter of an offering described in
Section 2.1 or Section 2.2 states that, in its good faith
judgment (i) the size of the offering that the Selling
Shareholder, the Company and any other Persons intend to
make or (ii) the combination of securities that the Selling
Shareholder, the Company and such other Persons intend to
include in such offering are such that the success of the
offering is reasonably likely to be materially and adversely
affected by the inclusion of the Registrable Securities,
then:
(a) if the size of the offering is the basis of
such Underwriter's opinion, the amount of Registrable
Securities to be offered for the account of the Selling
Shareholder shall be reduced to the extent necessary to
reduce the total amount of securities to be included in such
offering to the amount recommended by such Underwriter,
provided that (x) in the case of a Demand Registration, the
amount of Registrable Securities to be offered for the
account of the Selling Shareholder shall be reduced only
after the amount of securities to be offered for the account
of the Company and any other Persons has been reduced to
zero, and (y) in the case of a Piggy-Back Registration, if
securities are being offered for the account of Persons
other than the Company, then the proportion by which the
aggregate amount of such Registrable Securities intended to
be offered for the account of the Selling Shareholder is
reduced shall not exceed the proportion by which the amount
of such securities intended to be offered for the account of
such other Persons is reduced; and
(b) if the combination of securities to be offered
is the basis of such Underwriter's opinion, the Registrable
Securities to be included in such offering shall be reduced
as described in clause (a) above, except that in the case of
a Piggy-Back Registration, if the actions described in sub-
clause (y) of the proviso in such clause (a) would, in the
judgment of the managing Underwriter, be insufficient to
substantially eliminate the adverse effect that inclusion of
the Registrable Securities requested to be included would
Page 75 of 93
have on such offering, such Registrable Securities will be
excluded from such offering.
SECTION 2.4. Registration Expenses. In
connection with any Demand Registration or Piggy-Back
Registration, the Company shall pay the following expenses
incurred in connection with such registration: (i) all SEC,
stock exchange and National Association of Securities
Dealers, Inc. registration and filing fees, (ii) fees and
expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable
Securities), (iii) printing expenses, (iv) fees and expenses
incurred in connection with the listing of the Registrable
Securities on the NASDAQ National Market System (or, if no
shares of Capital Stock are listed for trading on such
system, such other principal exchange or market where shares
of Capital Stock are listed or otherwise admitted for
trading), (v) fees and expenses of counsel and independent
certified public accountants for the Company (including fees
and expenses associated with the delivery of special audits
or comfort letters), (vi) the reasonable fees and expenses
of any additional experts retained by the Company in
connection with such registration and (vii) internal
expenses of the Company (including salaries and expenses of
officers and employees). The Selling Shareholder shall pay
any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the
Selling Shareholder requests that any Registrable Securities
be registered pursuant to Article II hereof, the Company
will use its reasonable efforts to effect the registration
and sale of such Registrable Securities in accordance with
the requested method of disposition thereof as promptly as
reasonably practicable, and in connection with any such
request:
(a) The Company will as expeditiously as possible
prepare and file with the SEC a registration statement
on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate
and available for the sale of the Registrable
Securities to be registered thereunder in accordance
with the intended method of distribution thereof, and
Page 76 of 93
use its reasonable efforts to cause such filed
registration statement to become and remain effective
for a period of not more than six months (or such
shorter period which will terminate when all
Registrable Securities covered by such registration
statement have been sold (but not before the expiration
of the period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable))
after the date of the original filing or such other
period as is necessary to comply with the provisions of
the Securities Act, provided that if the Company shall
furnish to the Selling Shareholder a certificate signed
by the Company's Chairman, President or any
Vice-President stating that in his good faith judgment
it would be detrimental or otherwise disadvantageous to
the Company or its shareholders for such a registration
statement to be filed as expeditiously as possible, the
Company shall have a period of not more than 180 days
within which to file such registration statement
measured from the date of the Company's receipt of the
Selling Shareholder's request for registration in
accordance with Section 2.1.
(b) The Company will, if requested, prior to
filing such registration statement or any amendment or
supplement thereto, furnish to the Selling Shareholder
and each applicable managing Underwriter, if any,
copies thereof, and thereafter furnish to the Selling
Shareholder and each such Underwriter, if any, such
number of copies of such registration statement,
amendment and supplement thereto (in each case
including all exhibits thereto and documents
incorporated by reference therein) and the prospectus
included in such registration statement (including each
preliminary prospectus) as the Selling Shareholder or
each such Underwriter may reasonably request in order
to facilitate the sale of the Registrable Securities.
(c) After the filing of the registration
statement, the Company will promptly notify the Selling
Shareholder of any stop order issued or, to the
Company's knowledge, threatened to be issued by the SEC
and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(d) The Company will use reasonable efforts to
register or otherwise qualify the Registrable
Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in
the United States as the Selling Shareholder reasonably
Page 77 of 93
requests, and to do any and all other acts and things
that may be necessary or advisable to consummate the
requested disposition of the Registrable Securities,
provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but
for this paragraph (d), (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction.
(e) The Company will as promptly as practicable
notify the Selling Shareholder, at any time when a
prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in
connection with sales by an Underwriter or dealer, of
the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit
to state any material fact required to be stated
therein or necessary to make the statements therein, in
the light of the circumstances under which they were
made, not misleading and promptly make available to the
Selling Shareholder and to the Underwriters any such
supplement or amendment. The Selling Shareholder
agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind
described in the preceding sentence, the Selling
Shareholder will forthwith discontinue the offer and
sale of Registrable Securities pursuant to the
registration statement covering such Registrable
Securities until receipt by the Selling Shareholder and
the Underwriters of the copies of such supplemented or
amended prospectus. In the event the Company shall
give such notice, the Company shall extend the period
during which such registration statement shall be
maintained effective as provided in Section 3.1(a)
hereof by the number of days during the period from and
including the date of the giving of such notice to the
date when the Company shall make available to the
Selling Shareholder such supplemented or amended
prospectus.
(f) The Company will enter into customary
agreements (including an underwriting agreement having
representations and closing documents consistent with
underwriting agreements heretofore entered into by the
Company) and take such other actions as are reasonably
Page 78 of 93
required in order to expedite or facilitate the sale of
such Registrable Securities.
(g) The Company will make available for
inspection by the Selling Shareholder, any Underwriter
participating in any disposition pursuant to such
registration statement and any attorney, accountant or
other professional retained by the Selling Shareholder
or Underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate
documents and properties of the Company (collectively,
the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence
responsibility, and cause the Company's officers,
directors and employees to supply all information
reasonably requested by any Inspectors in connection
with such registration statement. Records which the
Company determines, in good faith, to be confidential
and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such registration
statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a
court of competent jurisdiction. The Selling
Shareholder agrees that it will, upon learning that
disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records
deemed confidential.
(h) The Company will furnish to the Selling
Shareholder and each Underwriter a signed counterpart,
addressed to the Selling Shareholder or such
Underwriter, of (i) an opinion or opinions of counsel
to the Company and (ii) a comfort letter or comfort
letters from the Company's independent public
accountants, each in customary form and covering such
matters of the type customarily covered by opinions or
comfort letters, as the case may be, as the Selling
Shareholder or the managing Underwriter reasonably
requests.
(i) The Company will otherwise use its reasonable
efforts to comply with all applicable rules and
regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months,
beginning within three months after the effective date
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of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the SEC
thereunder.
(j) The Company will use its reasonable efforts
to cause all such Registrable Securities to be listed
on each securities exchange or trading system on which
similar securities issued by the Company are then
listed.
The Company may require the Selling Shareholder to
furnish in writing to the Company such information regarding
the Selling Shareholder, the plan of distribution of the
Registrable Securities and other information as the Company
may from time to time reasonably request or as may be
legally required in connection with such registration.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The
Company agrees to indemnify and hold harmless, to the extent
permitted by law, the Selling Shareholder, its officers and
directors, and each Person, if any, who controls the Selling
Shareholder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement
of a material fact contained in any registration statement
or prospectus relating to the Registrable Securities (as
amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or
liabilities are caused by (i) any such untrue statement or
omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by or on
behalf of the Selling Shareholder expressly for use therein
or (ii) the Selling Shareholder's failure to comply with a
prospectus delivery requirement imposed on it under
applicable law, if any, including any failure to deliver,
after delivery of a preliminary prospectus, a prospectus
containing corrected, modified or amended disclosure with
respect to any material fact. The Company also agrees to
indemnify any Underwriters of the Registrable Securities,
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their officers and directors and each person who controls
such Underwriters on substantially the same basis as that of
the indemnification of the Selling Shareholder provided in
this Section 4.1.
SECTION 4.2. Indemnification by the Selling
Shareholder. The Selling Shareholder agrees to indemnify
and hold harmless the Company, its officers and directors,
and each Person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the Selling
Shareholder, but only with reference to information relating
to the Selling Shareholder or the plan of distribution
furnished in writing by or on behalf of the Selling
Shareholder expressly for use in any registration statement
or prospectus relating to the Registrable Securities, or any
amendment or supplement thereto, or any preliminary
prospectus. The Selling Shareholder also agrees to
indemnify and hold harmless any Underwriters of the
Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially
the same basis as that of the indemnification of the Company
provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification
Proceedings. In case any proceeding (including any
governmental investigation) shall be instituted involving
any Person in respect of which indemnity may be sought
pursuant to Section 4.1 or Section 4.2, such Person (the
"Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party, upon the
request of the Indemnified Party, shall assume the defense
of such proceeding and retain counsel reasonably
satisfactory to such Indemnified Party to represent such
Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding.
In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified
Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Party
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shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees
and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such
Indemnified Parties, and that all such reasonable fees and
expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Indemnified Parties,
such firm shall be designated in writing by the Indemnified
Parties and shall be reasonably satisfactory to the
Indemnifying Party. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without
its prior written consent, but if settled with such consent,
or if there be a final judgment for the plaintiff, the
Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability
(to the extent stated above) by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any
time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified Party for
fees and expenses of counsel as contemplated by the third
sentence of this paragraph, the Indemnifying Party agrees
that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement
is entered into more than 30 business days after receipt by
such Indemnifying Party of the aforesaid request and (ii)
such Indemnifying Party shall not have reimbursed the
Indemnified Party in accordance with such request prior to
the date of such settlement. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party
from all liability arising out of such proceeding.
SECTION 4.4. Contribution. (a) If the
indemnification provided for in this Article IV is
unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein,
then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) as between the
Company and the Selling Shareholder on the one hand and the
Underwriters on the other, in such proportion as is
appropriate to reflect the relative benefits received by the
Company and the Selling Shareholder on the one hand and the
Underwriters on the other from the offering of the
Registrable Securities, or if such allocation is not
Page 82 of 93
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but
also the relative fault of the Company and the Selling
Shareholder on the one hand and of the Underwriters on the
other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations and (ii)
as between the Company on the one hand and the Selling
Shareholder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and
of the Selling Shareholder in connection with such
statements or omissions, as well as any other relevant
equitable considerations.
(b) The relative benefits received by the Company
and the Selling Shareholder on the one hand and the
Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling
Shareholder bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as
set forth in the table on the cover page of the prospectus.
The relative fault of the Company and the Selling
Shareholder on the one hand and of the Underwriters on the
other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company
and the Selling Shareholder or by the Underwriters. The
relative fault of the Company on the one hand and of the
Selling Shareholder on the other shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to
information supplied by such party, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or
omission.
(c) The Company and the Selling Shareholder agree
that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata
allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or
liabilities referred to in the immediately preceding
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paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article IV, no
Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and the Selling
Shareholder shall not be required to contribute any amount
in excess of the amount by which the total price at which
the Registrable Securities were offered to the public
exceeds the amount of any damages which the Selling
Shareholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation.
ARTICLE V
MISCELLANEOUS
5.1. Participation in Underwritten Registrations.
The Selling Shareholder may not participate in any
underwritten registered offering pursuant to a Piggy-Back
Registration unless it (a) agrees to sell its securities on
the basis provided in any underwriting arrangements approved
by the Person entitled to approve such arrangements and
(b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
5.2. Rule 144. The Company covenants that it
will file any reports required to be filed by it under the
Securities Act and the Exchange Act and that it will take
such further action as the Selling Shareholder may
reasonably request to the extent required from time to time
to enable it to sell Registrable Securities without
registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC
("Rule 144"). Upon the request of the Selling Shareholder,
Page 84 of 93
the Company will deliver to it a written statement as to
whether it has complied with such reporting requirements.
5.3. Restrictions on Public Sale by the Selling
Shareholder. To the extent not inconsistent with applicable
law, if any Registrable Securities are included in a Demand
Registration or a Piggy-Back Registration, the Selling
Shareholder will agree not to effect any public sale or
distribution of the issue being registered or a similar
security of the Company, or any securities convertible into
or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144, during the 14 days
prior to, and during the 90-day period beginning on, the
effective date of such registration statement (except as
part of such registration), if and to the extent requested
by the managing Underwriter or Underwriters in the case of
an underwritten offering.
5.4. Restrictions on Public Sale by the Company.
The Company agrees, if and to the extent requested by the
managing Underwriter or Underwriters in the case of an
underwritten offering, not to effect any public sale or
distribution of any securities similar to those being
registered in accordance with a Demand Registration or a
Piggy-Back Registration, or any securities convertible into
or exchangeable or exercisable for such securities, during
the 14 days prior to, and during the 90-day period beginning
on, the effective date of any registration statement (except
as part of such registration as permitted by Article II) or
the commencement of a public distribution of Registrable
Securities.
5.5. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,
if to the Selling Shareholder, to:
Bell Canada International Inc.
1000, rue de la Gauchetiere West
Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Attention: Chief Financial Officer
Fax: 514-392-2262
Page 85 of 93
with a copy to:
Bell Canada International Inc.
1000, rue de la Gauchetiere West
Bureau 1100
Montreal, Quebec
Canada H3B 4Y8
Attention: General Counsel
Fax: 514-392-2342
if to the Company, to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: President
Fax: 303-799-4675
with a copy to:
Jones Intercable, Inc.
9697 East Mineral Avenue
Englewood, Colorado 80112
Attention: General Counsel
Fax: 303-799-1644
All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient
thereof if received prior to 5 p.m. in the place of receipt
and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next
succeeding business day in the place of receipt.
5.6. Successors and Assigns. (a) The provisions
of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and assigns, and to the extent applicable heirs,
executors, administrators and legal representatives.
(b) Neither the Company nor the Selling
Shareholder may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without
the prior written consent of the other parties hereto,
provided that the Selling Shareholder may assign its rights,
but not its obligations, to any entity which, at the time of
such assignment is, and thereafter during the term of this
Agreement remains, controlled, directly or indirectly, by
Bell Canada International Inc. and that has not issued debt
or equity interests to, nor invested in or lent money to,
Persons primarily engaged in the cable television,
telecommunications or educational programming businesses
Page 86 of 93
other than the Company or any of its Subsidiaries (an
"Eligible Assignee").
(c) In the event of an assignment to an Eligible
Assignee pursuant to this Section 5.6, such Eligible
Assignee agrees that neither it nor its Subsidiaries will
issue debt or equity interests to, nor invest in or lend
money to, Persons primarily engaged in the cable television,
telecommunications or educational programming businesses
other than the Company or its Subsidiaries.
5.7. Specific Performance. Each party hereto
agrees that each party hereto could be irreparably damaged
if any party failed to perform any obligation under this
Agreement, and that such party would not have an adequate
remedy at law for money damages in such event. Accordingly,
each party hereto shall be entitled to specific performance
and injunctive and other equitable relief to enforce the
performance of this Agreement. This provision is without
prejudice to any other rights that such party may have
against any party for any failure by such party to perform
its obligations under this Agreement.
5.8. Amendments and Waivers. (a) Any provision
of this Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed, in the
case of an amendment, by each party to this Agreement, or in
the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
5.9. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the
State of Colorado, without regard to the conflicts of law
rules of such state.
5.10. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instru-
ment. This Agreement shall become effective when each party
Page 87 of 93
hereto shall have received counterparts hereof signed by all
of the other parties hereto.
5.11. Headings. The headings contained in this
Agreement are for reference purposes only and shall not in
any way affect the meaning of interpretation of this
Agreement.
5.12. Entire Agreement. This Agreement
constitutes the entire agreement between the parties with
respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both
oral and written, between the parties with respect to the
subject matter of this Agreement.
5.13. Separability. In case any provision of
this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
5.14 Termination. The registration rights
granted under this Agreement will terminate on the sixth
anniversary of the date hereof.
Page 88 of 93
IN WITNESS WHEREOF, the undersigned have executed
this Agreement as of the date set forth above.
BELL CANADA INTERNATIONAL
INC.
By /s/ Martine Turcotte
---------------------------
Title: General Counsel and
Corporate Secretary
JONES INTERCABLE, INC.
By /s/ Elizabeth Steele
---------------------------
Title: Vice President
Page 89 of 93
EXHIBIT 5
BELL CANADA
INTERNATIONAL
NEWS RELEASE
March 28, 1994
BCI PURCHASES 13 PER CENT OF JONES INTERCABLE
TRANSACTION TERMS MODIFIED SLIGHTLY
MONTREAL -- Bell Canada International Inc. (BCI) and Jones
Intercable, Inc. of Englewood, Colorado today announced
that, as a result of recent Federal Communications
Commission pronouncements, they are modifying the financial
terms of the proposed strategic alliance announced in
December 1993.
As a result, BCI is acquiring immediately a 13 per cent
interest in Jones Intercable, and expects to hold a total of
30 per cent by midsummer.
BCI maintains its commitment to invest US $400 million in
Jones Intercable, but the financial terms are modified as
follows:
bullet The initial investment of $261 million will be made in
two installments. BCI will immediately purchase 2.5
million newly issued Class A shares of Jones Intercable
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at $22 per share, giving BCI a 13 percent share in
Jones Intercable. When the BCI/Jones Intercable
transaction closes, BCI will purchase sufficient
additional Class A shares, at $27.50 per share, to
achieve a 30 per cent interest in Jones Intercable.
bullet BCI will commit an additional $139 million in order to
finance the growth of Jones Intercable and to maintain
its interest at 30 per cent.
bullet BCI will purchase an option worth $52 million from
Jones International and Glenn Jones, chairman and chief
executive officer of Jones Intercable, to acquire a
controlling interest in Jones Intercable.
Originally, BCI was to purchase all the Class A shares
needed for a 30 percent interest in one installment, when
the transaction closed. Also, BCI's original commitment to
finance growth was $125 million, and the value of the option
was $55 million.
BCI's investment today of $55 million allows the companies
to begin their business and growth strategies for Jones
Intercable in advance of the formal completion of their
strategic alliance. The companies expect to complete
definitive agreements for the overall alliance by mid-April.
Page 91 of 93
Closing of the transaction is expected by midsummer, subject
to certain conditions including acquisition by Jones
Intercable of the assets of Jones Spacelink, Ltd.
Derek H. Burney, chairman and chief executive officer of
BCI, stated that, "We are pleased to be moving forward with
our strategic alliance with Jones Intercable. Our
investment today will support Jones Intercable's aggressive
growth strategy and will lay the foundation for the balance
of our announced transaction".
Glenn R. Jones, chairman and chief executive officer of
Jones Intercable, stated, "In spite of regulatory confusion,
we are still committed to proceeding towards our alliance
with Bell Canada International. Their investment in us
today is a clear indication that the fundamental principles
on which our companies originally agreed to collaborate
remain intact."
Bell Canada International Inc. is responsible for the
international telecommunications investments and
telecommunications consulting services for its parent
company, BCE Inc., Canada's largest telecommunications
company.
Page 92 of 93
Jones Intercable, Inc., is one of the largest cable
television operators in the United States. It is also the
world's largest cable television management company,
managing cable operations for publicly held entities. It
manages cable operations in 20 states and three countries.
For information:
Daniel E. Somers Patrick J. Lombardi
Bell Canada International Inc. Jones Financial Group, Inc.
(514) 392-2260 (303) 792-3111
Page 93 of 93
